<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CINCINNATI BELL INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1056105
- -------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
201 East Fourth Street, Cincinnati, Ohio 45202
- -------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Series A Preferred Share Purchase Rights New York Stock Exchange
Cincinnati Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
---------------------------------------
(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On March 3, 1997, the Board of Directors of Cincinnati Bell Inc. (the
"Company") declared a dividend distribution of one right ("Right") on each of
the Company's outstanding Common Shares, par value $1.00 per share (the
"Common Shares"), to holders of record of the Common Shares at the close of
business on May 2, 1997 (the "Record Date"). One Right also will be
distributed for each Common Share issued after May 2, 1997, until the
Distribution Date (which is described in the next paragraph). Each Right
entitles the registered holder to purchase from the Company a unit ("Unit")
consisting of one one-hundredth of a Series A Preferred Share of the Company
(the "Preferred Shares") at a purchase price of $125 per Unit, subject to
adjustment (the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement dated as of April 29, 1997 (the "Rights
Agreement") between the Company and The Fifth Third Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Share certificates
representing shares then outstanding, and no separate Rights Certificates
will be distributed. The Rights will separate from the Common Shares and a
Distribution Date will occur upon the earliest of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
Common Shares or (ii) 10 business days following the commencement of a tender
offer or exchange offer that would if consummated result in a person or group
beneficially owning 15% or more of the outstanding Common Shares.
Until the Distribution Date (i) the Rights will be evidenced by the
Common Share certificates and will be transferred with and only with such
Common Share certificates, (ii) new Common Share certificates issued after
May 2, 1997 will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Shares outstanding will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 2, 2007, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except for certain issuances in
connection with outstanding options and convertible securities and as
otherwise determined by the Board of Directors, only Common Shares issued
prior to the Distribution Date will be issued with Rights.
If a person becomes the beneficial owner of 15% or more of the Common
Shares ("Flip-In Event"), each holder of a Right will have the right to
receive, upon exercise, Common Shares having a value equal to two times the
exercise price (Purchase Price) of the Right. Moreover, the rights will not
be exercisable until the Rights are no longer redeemable as described below.
If the Company does not have enough authorized Common Shares to satisfy the
exercise of the Rights, the Company will be required to substitute value in
the form of cash,
<PAGE>
property, debt or equity securities, or a reduction of the Purchase Price, or
any combination of the foregoing, in an aggregate amount equal to the value
of the Common Shares which would otherwise be issuable. In addition, the
Company may provide that, in lieu of payment of any exercise price by holders
of the Rights, the Company will issue to such holders securities equal to the
value of the spread between the exercise price and the value of the Common
Shares. The Acquiring Person would not be permitted to exercise any Rights
and any Rights held by such person (or certain transferees of such person)
will be null and void and non-transferable.
For example, at an exercise price of $125 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following a Flip-In
Event would entitle its holder to purchase $250 worth of Common Shares (or
other consideration, as noted above) for $125. Assuming that the Common
Shares had a per share value of $25 at such time, the holder of each valid
Right would be entitled to purchase ten Common Shares for $125.
Alternatively, at the discretion of the Board of Directors, each Right
following a Flip-In Event, without payment of the exercise price, would
entitle its holder to Common Shares (or other consideration, as noted above)
with a value of $125.
If, following the Distribution Date, the Company is acquired in certain
specified mergers or other business combinations (I.E., the Company does not
survive or its Common Shares are changed or exchanged), or 50% or more of its
assets or earning power (on a consolidated basis) is sold or transferred
in one transaction or a series of related transactions ("Flip-Over Events"),
each Right becomes a Right to acquire common stock of the other party to the
transaction (or its ultimate parent in certain circumstances) having a value
equal to two times the Purchase Price. As an enforcement mechanism, the
Rights Agreement prohibits the Company from entering into any such
transaction unless the other party agrees to comply with the provisions of
the Rights.
The Purchase Price payable and the number of Units of Preferred Shares or
other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) if holders of the Preferred Shares are granted certain
rights or warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right, at any time prior to a Flip-In Event.
Immediately upon the action of the Board
-2-
<PAGE>
of Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the $0.01
redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for shares (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.
As long as the Rights are redeemable, the Company may amend any provision
of the Rights Agreement in any respect without the approval of the holders of
the Rights. At any time when the Rights are no longer redeemable, the Company
may amend the Rights Agreement without the approval of the holders of the
Rights in order to cure any ambiguity, correct or supplement any provision
which may be defective or inconsistent with any other provision, shorten or
lengthen any time period, or change or supplement the provisions in any
manner in which the Company may deem necessary or desirable; provided that no
such supplement or amendment shall adversely affect the interests of the
holders of the Rights, and no such amendment may cause the Rights again to
become redeemable or cause the Rights Agreement again to become amendable
other than in accordance with the terms of the original Rights Agreement.
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which
is incorporated herein by reference.
ITEM 2. EXHIBITS
EXHIBIT
NUMBER TITLE
3.(i) Amended Articles of Incorporation of Cincinnati Bell Inc.
4.1 Rights Agreement, dated as of April 29, 1997, between Cincinnati
Bell Inc. and The Fifth Third Bank, as Rights Agent, which includes
as Exhibit A thereto the Form of Certificate of Amendment of the
Amended Articles of Incorporation of Cincinnati Bell Inc.
increasing the number of authorized Series A Preferred Shares from
250,000 to 2,000,000, as Exhibit B thereto the Form of Rights
Certificate, and as Exhibit C thereto the Summary of Rights to
Purchase Preferred Shares.
4.2 Form of Certificate of Amendment of the Amended Articles of
Incorporation of Cincinnati Bell Inc. increasing the number of
authorized Common Shares from 240,000,000 to 480,000,000.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CINCINNATI BELL INC.
By: /s/ Brian C. Henry
--------------------------
Brian C. Henry, Executive Vice President and
Chief Financial Officer
Dated: May 1, 1997
-4-
<PAGE>
AMENDED ARTICLES OF INCORPORATION
OF
CINCINNATI BELL INC
November 9, 1989
FIRST: The name of the corporation is CINCINNATI BELL INC.
SECOND: The place in Ohio where its principal office is located is
Cincinnati, Hamilton County.
THIRD: The purpose for which the corporation is formed is to engage in any
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The number of shares that the corporation is authorized to have
outstanding is 240,000,000 common shares, $1.00 par value (classified as "Common
Shares"), 4,000,000 voting preferred shares without par value (classified as
"Voting Preferred Shares") and 1,000,000 non-voting preferred shares without
par value (classified as "Non-Voting Preferred Shares"). The preferred shares
of both classes are collectively referred to herein as "Preferred Shares". The
express terms of the shares of each of such classes are as follows:
1. Preferred Shares may be issued from time to time in one or more series.
All Preferred Shares of all series shall rank equally and be identical in
all respects except that only Voting Preferred Shares shall be voting
shares and except that the board of directors is authorized to adopt
amendments to the Amended Articles in respect of any unissued or treasury
Preferred Shares and thereby to fix or change, to the full extent now or
hereafter permitted by the laws of Ohio, the division of such shares into
series and the designation and authorized number of shares of each series
and, subject to the provisions of this Article Fourth, the relative rights,
preferences and limitations of each series and the variations in such
rights, preferences and limitations as between series and specifically is
authorized to fix or change with respect to each series:
(a) the dividend rate on the shares of such series, the
dates of payment of such
1
<PAGE>
dividends, and the date or dates from which such dividends shall be
cumulative;
(b) the times when, the prices at which, and all other
terms and conditions upon which, shares of such series shall
be redeemable;
(c) the amounts which the holders of shares of such series
shall be entitled to receive upon the liquidation,
dissolution or winding up of the corporation, which amounts
may vary depending on whether such liquidation, dissolution
or winding up is voluntary or involuntary and, if voluntary,
may vary at different dates;
(d) whether or not the shares of such series shall be
subject to the operation of a purchase, retirement or
sinking fund and, if so, the extent to and manner in which
such purchase, retirement or sinking fund shall be applied
to the purchase or redemption of the shares of such series
for retirement or for other corporate purposes and the terms
and provisions relative to the operation of such fund or
funds;
(e) whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other
class or series and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any,
of adjusting the same;
(f) the restrictions, if any, upon the payment of dividends
or making of other distributions on, and upon the purchase
or other acquisition of, Common Shares;
(g) the restrictions, if any, upon the creation of
indebtedness, and the restrictions, if any, upon the issue
of shares of such series or of any additional shares ranking
on a parity with or prior to the shares of such series in
addition to the restrictions provided for in this Article
Fourth; and
(h) such other rights, preferences and limitations as shall
not be inconsistent with this Article Fourth.
2
<PAGE>
All shares of any particular series shall rank equally and
be identical in all respects except that shares of any one
series issued at different times may differ as to the date
from which dividends shall be cumulative.
2. Dividends on Preferred Shares of each series shall be cumulative from
the date or dates fixed with respect to such series and shall be paid or
declared or set apart for payment for all past dividend periods and for the
current dividend period before any dividends (other than dividends payable
in Common Shares) shall be declared or paid or set apart for payment on
Common Shares. Whenever, at any time, full cumulative dividends for all
past dividend periods and for the current dividend period shall have been
paid or declared and set apart for payment on all then outstanding
Preferred Shares and all requirements with respect to any purchase,
retirement or sinking fund or funds for all series of Preferred Shares
shall have been complied with, the board of directors may declare dividends
on Common Shares, and Preferred Shares shall not be entitled to share
therein.
3. Upon any liquidation, dissolution or winding up of the corporation, the
holders of Preferred Shares of each series shall be entitled to receive the
amounts to which such holders are entitled as fixed with respect to such
series, including all dividends accumulated to the date of final
distribution, before any payment or distribution of assets of the
corporation shall be made to or set apart for the holders of Common Shares,
and after such payments shall have been made in full to the holders of
Preferred Shares, the holders of Common Shares shall be entitled to receive
any and all assets remaining to be paid or distributed to shareholders, and
the holders of Preferred Shares shall not be entitled to share therein.
For the purposes of this paragraph, the voluntary sale, conveyance, lease,
exchange or transfer of all or substantially all the property or assets of
the corporation or a consolidation or merger of the corporation with one
or more other corporations (whether or not the corporation is the
corporation surviving such consolidation or merger) shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary.
4. Each outstanding Common Share and each outstanding Voting Preferred
Share shall entitle the holder thereof to one vote on each matter properly
submitted to the shareholders for their vote, consent, waiver, release or
other action, subject to the provisions of law from time to time in effect
with respect to cumulative voting. Except as otherwise required by law or
by this Article Fourth, Non-Voting Preferred Shares
3
<PAGE>
shall not entitle the holders thereof to vote, consent, waive, release or
otherwise act on any question or in any proceeding or to be represented at
or receive notice of any meeting of shareholders.
5. So long as any Preferred Shares are outstanding, the corporation will
not (a) without the affirmative vote or consent of the holders of at least
two-thirds of all Preferred Shares at the time outstanding, (1) authorize
shares ranking prior to Preferred Shares or (2) change any provision of
this Article Fourth so as to affect adversely Preferred Shares; (b) without
the affirmative vote or consent of the holders of at least two-thirds of
any series of Preferred Shares at the time outstanding, change any of the
provisions of such series so as to affect adversely the shares of such
series; or (c) without the affirmative vote or consent of the holders of at
least a majority of all Preferred Shares at the time outstanding, (1)
increase the authorized number of Preferred Shares or (2) authorize shares
of any other class ranking on a parity with Preferred Shares.
6. Whenever, at any time or times, dividends payable on Preferred Shares
shall be in default in an aggregate amount equivalent to six full quarterly
dividends on any series of Preferred Shares at the time outstanding, the
number of directors then constituting the board of directors of the
corporation shall ipso facto be increased by two, and the outstanding
Preferred Shares shall, in addition to any other voting rights, have the
exclusive right, voting separately as a class and without regard to series,
to elect two directors of the corporation to fill such newly created
directorships, and such right shall continue until such time as all
dividends accumulated on all Preferred Shares to the latest dividend
payment date shall have been paid or declared and set apart for payment.
7. If the amounts payable with respect to any requirement to retire
Preferred Shares are not paid in full with respect to all series as to
which such requirement exists, the number of shares to be retired in each
series shall be in proportion to the amounts which would be payable on
account of such requirement if all amounts payable were paid in full.
8. No holder of shares of any class shall have any preemptive rights.
9. Of the 4,000,000 Voting Preferred Shares of the corporation, 250,000
shall constitute a series of Voting Preferred Shares designated as Series A
Preferred Shares (the "Series A Preferred Shares") and have, subject and in
4
<PAGE>
addition to the other provisions of this Article Fourth, the following
relative rights, preferences and limitations:
(1) DIVIDENDS AND DISTRIBUTIONS
(A) Subject to the provisions of this Article Fourth, the
holders of the Series A Preferred Shares shall be entitled to
receive, when and as declared by the Board of Directors, out of
funds legally available for that purpose, cumulative dividends in
cash on the 1st day of January, April, July and October in each
year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a Series A
Preferred Share or fraction thereof, in an amount per share per
quarter (rounded to the nearest cent) equal to the greater of (i)
$20.00 or (ii) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions (other than a dividend payable in Common Shares or
a subdivision of the outstanding Common Shares, by
reclassification or otherwise), declared on the Common Shares,
since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of a Series A Preferred Share or
fraction thereof; PROVIDED THAT, in the event no dividend or
distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend on
the Series A Preferred Shares of $20.00 per share shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date. In the event the corporation shall at any time
declare or pay any dividend on the Common Shares payable in
Common Shares, or effect a subdivision or combination of the
outstanding Common Shares (by reclassification or otherwise) into
a greater or lesser number of Common Shares, then in each such
case the amount to which holders of the Series A Preferred Shares
were entitled immediately prior to such event under clause (ii)
of the next preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number
of Common Shares
5
<PAGE>
outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding
immediately prior to such event.
(B) The Board of Directors may fix a record date for the
determination of holders of the Series A Preferred Shares
entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days
prior to the date fixed for the payment thereof. Dividends shall
begin to accrue and be cumulative on outstanding Series A
Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such Series A Preferred Shares,
unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of the Series A Preferred Shares
entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the Series A
Preferred Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(2) LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation, then,
subject to the provisions of this Article Fourth, the holders of
the Series A Preferred Shares shall be entitled to receive, from
the assets of the corporation available for distribution to
shareholders, an amount equal to all dividends accumulated to the
date of final distribution plus an amount equal to the greater of
(A) $125.00 per share or (B) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, of
100 times the aggregate amount to be distributed per share to
holders of Common Shares. All such preferential amounts shall be
paid or set apart for payment before the payment or setting
6
<PAGE>
apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of any class of
shares ranking junior as to assets to the Series A Preferred
Shares, or the holders of any series of Preferred Shares
ranking junior as to assets to the Series A Preferred Shares.
In the event the corporation shall at any time declare or pay
any dividend on Common Shares payable in Common Shares, or
effect a subdivision or combination of the outstanding Common
Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in each such case the
aggregate amount to which holders of the Series A Preferred
Shares were entitled immediately prior to such event under
clause (B) of the next preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such
event.
(3) REDEMPTION. The Series A Preferred Shares shall not be
redeemable.
(4) VOTING RIGHTS. Subject to the provisions of this Article Fourth,
each Series A Preferred Share shall entitle the holder thereof to
one vote on all matters submitted to a vote of the shareholders
of the corporation. The holders of fractional Series A Preferred
Shares shall not be entitled to any vote on any matter submitted
to a vote of the shareholders of the corporation.
(5) CERTAIN RESTRICTIONS.
(A) Subject to the provisions of this Article Fourth, whenever
quarterly dividends or other dividends or distributions payable
on the Series A Preferred Shares are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether
or not declared, on outstanding Series A Preferred Shares shall
have been paid in full, the corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Shares;
7
<PAGE>
(ii) redeem, purchase or otherwise acquire for
consideration shares ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the
Series A Preferred Shares; PROVIDED THAT the corporation may
at any time redeem, purchase or otherwise acquire any such
junior shares in exchange for any shares of the corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Shares;
(iii) declare or pay dividends on or make any other
distributions on any shares ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Shares, except dividends paid
ratably on the Series A Preferred Shares and all such parity
shares on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iv) purchase or otherwise acquire for consideration any
Series A Preferred Shares, or any shares ranking on a parity
with the Series A Preferred Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration
any shares of the corporation unless the corporation could,
pursuant to paragraph (A) of this subparagraph 5, purchase or
otherwise acquire such shares at such time and in such manner.
(6) REACQUIRED SHARES. Any Series A Preferred Shares purchased or
otherwise acquired by the corporation in
8
<PAGE>
any manner whatsoever shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement
become authorized but unissued Voting Preferred Shares and may be
reissued as part of a new series of Voting Preferred Shares to be
created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
(7) CONSOLIDATION, MERGER, ETC. In case the corporation shall enter
into any consolidation, merger, combination or other transaction in
which the Common Shares are exchanged for or changed into other shares
or securities, cash and/or any other property, then in any such case
the Series A Preferred Shares shall at the same time be similarly
exchanged or changed in an amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of shares, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each Common
Share is changed or exchanged. In the event the corporation shall at
any time declare or pay any dividend on Common Shares payable in
Common Shares, or effect a subdivision or combination of the
outstanding Common Shares (by reclassification or otherwise) into a
greater or lesser number of Common Shares, then in each such case the
amount set forth in the next preceding sentence with respect to the
exchange or change of Series A Preferred Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and
the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
10. Of the 4,000,000 Voting Preferred Shares of the corporation, 1,578,948
shall constitute a series of Voting Preferred Shares designated as 7.25%
Cumulative Convertible Voting Preferred Shares (for the purposes of this
paragraph 10, the "Preferred Shares") and have, subject and in addition to
the other provisions of this Article Fourth, the following relative rights,
preferences and limitations:
1. DIVIDENDS.
(a) The holders of record of Preferred Shares shall be entitled to
receive cash dividends, when, as and if declared by the Board of
Directors out
9
<PAGE>
of assets of the corporation which are legally available for the
payment of such dividends, at the annual rate of 7.25% per Preferred
Share, and no more, payable quarterly on the first day of March, June,
September and December in each year commencing on September 1, 1988.
Dividends shall be cumulative and will accrue on each Preferred Share
from the date of issue thereof. Dividends payable on Preferred Shares
for any period less than a full quarter shall be computed on the basis
of a 360-day year. Accrued but unpaid dividends shall not bear
interest. So long as any Preferred Shares are outstanding, the
corporation shall not declare, pay or set apart any dividend on the
Common Shares or declare, make or set apart any distribution on the
Common Shares unless concurrently therewith all dividends or
distributions on Preferred Shares, through the date of such
declaration, payment, making or setting apart of any dividend or
distribution on the Common Shares, are declared, paid, made or set
apart, as the case may be.
(b) Subject to the limitations set forth in this subsection l(b), if
because of Tax Law Changes (as defined below) holders of Preferred
Shares would realize less or more after-tax yield from dividend
payments on the Preferred Shares than would have been the case had
such Tax Law Changes not occurred, then the rate of dividends will
increase or decrease, as appropriate, so that the net after-tax yield
to a holder of Preferred Shares would be the same as if there had been
no Tax Law Changes. "Tax Law Changes" means any change, effective on
or after July 22, 1988, in the Internal Revenue Code of 1986, as
amended (the "Code"), or any other revenue statute of the United
States, or the issuance of any regulation, ruling, administrative
interpretation or judicial or other official interpretation, the
effect of which is to reduce, eliminate or increase the dividends
received deductions with respect to dividend payments on the Preferred
Shares presently permitted by Section 243 of the Code; PROVIDED,
HOWEVER, that any ruling, administrative, judicial or other
interpretation which is based on the action or failure to act of a
holder of the Preferred Shares (other than acquisition of the
Preferred Shares) shall not be deemed to be a Tax Law Change. No
adjustment is
10
<PAGE>
to be made under this subsection l(b) for changes in the laws of any
state or municipality.
(c) If, as a result of the Preferred Shares being deemed to be debt,
rather than equity for tax purposes (a "Debt/Equity
Recharacterization"), a holder of record of Preferred Shares suffers
an adverse tax effect as a result thereof, including the loss of the
right to claim, being delayed in claiming, or suffering a disallowance
of the dividend exclusion or other tax attribute that otherwise would
be available to such holder if the Preferred Shares were treated as
equity for tax purposes (any such event being referred to as a "Tax
Loss"), then (i) the rate of dividends on the Preferred Shares paid by
the corporation after an event of a Debt/Equity Recharacterization
will increase so that the net after-tax yield from all Preferred Share
dividend payments to such holder of Preferred Shares will be the same
as if no Debt/Equity Recharacterization had occurred, and (ii) within
30 days after the mailing date of notice of a Tax Loss by a holder to
the corporation, the corporation shall pay to a holder of Preferred
Shares an amount equal to any additional tax liability owed by any
such holder with respect to any dividend payments theretofore made by
the corporation as to which a Tax Loss arose.
(d) The corporation covenants that neither it nor any of its
affiliates (within the meaning of Section 1504(a) of the Code) will at
any time take any action, omit to take any action or file any return
or document inconsistent with the treatment of the Preferred Shares as
the equity for tax and accounting purposes, unless otherwise agreed
to by a majority of the holders of record of Preferred Shares.
2. LIQUIDATION.
Upon any liquidation, dissolution or winding up of the corporation,
after payment or provision for payment of the debts and other
liabilities of the corporation, the holders of the Preferred Shares
shall be entitled, before any distribution or payment is made upon any
Common Shares, to be paid an amount equal to $38.00 per share, plus an
amount equal to dividends accrued and unpaid to the date of such
payment (unless such liquidation,
11
<PAGE>
dissolution or winding up is the result of a transaction giving rise
to rights under Section 9 of the Preferred Shares Purchase Agreement
dated July 22, 1988 (the "Purchase Agreement") between the corporation
and The Western and Southern Life Insurance Company, in which case
holders of Preferred Shares may elect to enforce any rights
thereunder), or, in the event that the assets of the corporation
remaining after such payment or provision for payment of the debts and
other liabilities of the corporation are insufficient to permit
such payment in full to the holders of the Preferred Shares, such
holders shall be entitled to share pro rata in the distribution
of such remaining assets of the corporation; and the holders of
Preferred Shares shall not be entitled to any further payment, such
amounts being herein sometimes referred to as the "Liquidation
Payments". Written notice of such liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Payment and
the place where said sums shall be payable and containing a statement
of or reference to the conversion right set forth in Section 3, shall
be given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to the holders of record of Preferred
Shares, such notice to be addressed to each stockholder at his post
office address as shown by the records of the corporation.
3. CONVERSION.
(a) CONVERSION. The holder of any Preferred Shares shall have the
right, at any time and from time to time, to convert all or any of
such shares into fully-paid and nonassessable Common Shares of the
corporation at the Conversion Rate of one of Common Share per
Preferred Share or at the Conversion Rate that results from making the
adjustments specified in subsection 3(b) below. To the extent
permitted by law, when Preferred Shares are converted, all dividends
accrued and unpaid on the Preferred Shares so converted to the date of
conversion (whether or not currently payable) shall be immediately due
and payable and must accompany the Common Shares issued upon such
conversion.
In order to exercise the conversion right, the holder of Preferred
Shares shall surrender the
12
<PAGE>
certificate representing such shares at the principal office of the
corporation or at such other office of the corporation specified for
such purpose together with written notice to the corporation of the
number of Preferred Shares which the holder elects to convert, and
written instructions regarding the registration and delivery of
certificates for Common Shares acquired thereby. The person entitled
to receive Common Shares issuable upon conversion shall be deemed to
have become the holder of record of such shares at the close of
business on the date upon which the conversion right is so exercised.
If any certificate representing Preferred Shares shall have been
converted in part, the holder shall be entitled to a new certificate
representing the Preferred Shares not converted.
(b) ADJUSTMENT OF CONVERSION RATE. The Conversion Rate shall be
subject to adjustment as follows:
(i) If the corporation shall declare and pay to the holders of
Common Shares a dividend or other distribution payable in Common
Shares, the holders of Preferred Shares thereafter surrendered
for conversion shall be entitled to receive the number of Common
Shares which such holder would have owned or been entitled to
receive after the declaration and payment of such dividend or
other distribution if such Preferred Shares had been converted
immediately prior to the record date for the determination of
stockholders entitled to receive such dividend or other
distribution.
(ii) If the corporation shall subdivide the outstanding Common
Shares into a greater number of Common Shares, or combine the
outstanding Common Shares into a lesser number of shares, or
issue by reclassification of its Common Shares any shares of the
corporation, the Conversion Rate in effect immediately prior
thereto shall be adjusted so that each holder of Preferred Shares
thereafter surrendered for conversion shall be entitled to
receive the number of Common Shares or other shares which such
holder would have owned or been entitled to receive after the
happening of any of the events described above if such Preferred
13
<PAGE>
Shares had been converted immediately prior to the happening of
such event on the day upon which such subdivision, combination or
reclassification, as the case may be, becomes effective.
(iii) If the corporation shall issue or sell any Common Shares
for a consideration per share less than the Current Market Price
of the Common Shares, then the Conversion Rate shall be adjusted
to the number determined by multiplying the Conversion Rate in
effect immediately prior to such issuance or sale by a fraction,
the numerator of which shall be the number of Common Shares
outstanding immediately prior to the issuance or sale of such
Common Shares plus the number of such Common Shares so issued or
sold, and the denominator of which shall be the number of Common
Shares outstanding immediately prior to the issuance or sale of
such Common Shares plus the number of Common Shares which the
aggregate consideration for such Common Shares so issued or sold
would purchase at a consideration per share equal to Current
Market Price. For the purpose of this subsection 3(b)(iii), the
date as of which such Current Market Price shall be computed
shall be the earlier of (x) the date on which the corporation
shall enter into a firm contract for the issuance or sale of such
Common Shares or (v) the date of the actual issuance or sales of
such shares.
(iv) If the corporation shall issue or sell any warrants or
options or other rights entitling the holders thereof to
subscribe for or purchase either any Common Shares or evidences
of indebtedness, shares of stock or other securities which are
convertible into or exchangeable, with or without payment of
additional consideration in cash or property, for Common Shares
(such convertible or exchangeable evidences of indebtedness,
shares of stock or other securities hereinafter being called
"Convertible Securities"), and the consideration per share for
which Common Shares may at any time thereafter be issuable
pursuant to such warrants or other rights or pursuant to the
terms of such Convertible Securities (when
14
<PAGE>
added to the consideration per Common Share, if any, received for
such warrants or other rights), shall be less than the Current
Market Price of the Common Shares at the date of such issue or
sale, then the Conversion Rate applicable to such series shall be
adjusted as provided in subsection 3(b)(iii) on the basis that
(x) the maximum number of Common Shares issuable pursuant to all
such warrants or other rights or necessary to affect the
conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and (y) the aggregate
consideration for such maximum number of Common Shares shall be
deemed to be the minimum consideration received and receivable by
the corporation for the issuance of such Common Shares (plus the
consideration, if any, received for such warrants or other
rights) pursuant to such warrants or other rights or pursuant to
the terms of such Convertible Securities.
(v) If the corporation shall issue or sell Convertible
Securities and the consideration per share for which Common
Shares may at any time thereafter be issuable pursuant to the
terms of such Convertible Securities shall be less than the
Current Market Price of the Common Shares at the date of such
issue or sale, then the Conversion Rate applicable to such series
shall be adjusted as provided in subsection 3(b)(iii) on the
basis that (x) the maximum number of Common Shares necessary to
effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (y) the
aggregate consideration for such maximum number of Common Shares
shall be deemed to be the minimum consideration received and
receivable by the corporation for the issuance of such Common
Shares pursuant to the terms of such Convertible Securities. No
adjustment of such Conversion Rate shall be made under this
subsection 3(b)(v) upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if
such adjustment shall previously have been made upon the issuance
of such
15
<PAGE>
warrants or other rights pursuant to subsection 3(b)(iv).
(vi) For the purposes of subsections 3(b)(iv) and 3(b)(v), the
date as of which such Conversion Rate shall be computed shall be
the earliest of (x) the date on which the corporation shall take
a record of the holders of its Common Shares for the purpose of
entitling them to receive any warrants or other rights referred
to in subsection 3(b)(iv) or to receive any Convertible
Securities, (y) the date on which the corporation shall enter
into a firm contract for the issuance of such warrants or other
rights or Convertible Securities or (z) the date of the actual
issuance of such warrants or other rights or Convertible
Securities.
(vii) No adjustment of a Conversion Rate shall be made under
subsection 3(b)(iii) upon the issuance of any Common Shares which
are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities,
if such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrants
or other rights therefor), pursuant to subsections 3(b)(iv) or
3(b)(v).
(viii) If any warrants or other rights (or any portions thereof)
which shall have given rise to an adjustment pursuant to
subsection 3(b)(iv) or conversion rights pursuant to Convertible
Securities which shall have given rise to an adjustment pursuant
to subsection 3(b)(v) shall have expired or terminated without
the exercise thereof and/or if by reason of the terms of such
warrants or other rights or Convertible Securities there shall
have been an increase or increases, with the passage of time or
otherwise, in the price payable upon the exercise or conversion
thereof, then the affected Conversion Rate hereunder shall be
readjusted (but to no greater extent than originally adjusted) on
the basis of (x) eliminating from the
16
<PAGE>
computation any Common Shares corresponding to such warrants or
other rights or conversion rights as shall have expired or
terminated, (y) treating the Common Shares, if any, actually
issued or issuable pursuant to the previous exercise of such
warrants or other rights or of conversion rights pursuant to any
Convertible Securities as having been issued for the
consideration actually received and receivable therefor, and (z)
treating any of such warrants or other rights or of conversion
rights pursuant to any Convertible Securities which remain
outstanding as being subject to exercise or conversion on the
basis of such exercise conversion price as shall be in effect at
the time; provided, however, that any consideration which was
actually received by the corporation in connection with the
issuance or sale of such warrants or other rights shall form part
of the readjustment computation even though such warrants or
other rights shall have expired without the exercise thereof.
The Conversion Rate shall be adjusted as provided in subsection
3(b)(iii) as a result of any increase in the number of Common
Shares issuable, or any decrease in the consideration payable
upon any issuance of Common Shares, pursuant to any antidilution
provisions contained in any warrants or other rights or in any
Convertible Securities.
(ix) To the extent that any Common Shares, any warrants or other
rights to subscribe for or purchase any Common Shares, or any
Convertible Securities shall be issued for a cash consideration,
the consideration received by the corporation therefor shall be
deemed to be the amount of the cash received by the corporation
therefor, or, if such Common Shares, warrants or other rights or
Convertible Securities are offered by the corporation for
subscription, the subscription price, or, if such Common Shares,
warrants or other rights or Convertible Securities are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in any
such case excluding any amounts paid or receivable for
17
<PAGE>
accrued interest or accrued dividends and without deduction of
any compensation, discounts or expenses paid or incurred by the
corporation for and in the underwriting of, or otherwise in
connection with, the issuance thereof. If and to the extent that
such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good
faith by the Board of Directors of the corporation. If Common
Shares shall be issued as part of a unit with warrants or other
rights, then the amount of consideration for the warrant or other
right shall be deemed to be the amount determined in good faith
at the time of issuance by the Board of Directors of the
corporation. If the Board of Directors of the corporation shall
not make any such determination, the consideration for the
warrant or other right shall be deemed to be zero.
(x) In case the corporation shall effect a reorganization, shall
merge with or consolidate into another corporation, shall sell,
transfer or otherwise dispose of all or substantially all of its
property, assets or business or shall otherwise engage in any
transaction whereby a "Change of Control", as defined in the
Purchase Agreement, shall occur and, pursuant to the terms of
such reorganization, merger, consolidation, disposition of assets
or other transaction effecting a Change of Control, shares of
stock or other securities, property or assets of the
corporation, successor or transferee or an affiliate thereof or
cash are to be received by or distributed to the holders of
Common Shares, then each holder of Preferred Shares shall be
given written notice from the corporation informing each holder
of the terms of such reorganization, merger, consolidation,
disposition of assets or other transaction effecting a Change of
Control and of the record date thereof for any distribution
pursuant thereto, at least ten days in advance of such record
date, and each holder of Preferred Shares, in addition
18
<PAGE>
to any other rights pursuant to the Purchase Agreement or the
terms hereof, shall have the right thereafter to receive, upon
conversion of such Preferred Shares, the number of shares or
other securities, property or assets of the corporation,
successor or transferee or affiliate thereof or cash receivable
upon or as a result of such reorganization, merger,
consolidation, disposition of assets or other transaction
effecting a Change of Control the number of Common Shares equal
to the Conversion Rate applicable to such shares immediately
prior to such event, multiplied by such number of shares as may
be converted. The provisions of this subsection 3(b)(x) shall
similarly apply to successive reorganizations, mergers,
consolidations or dispositions of assets or other transactions
effecting a Change of Control.
(xi) If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 20% of the outstanding
Common Shares, the corporation shall not effect any
consolidation, merger or sale with the person having made such
offer or with any affiliate of such person or engage in any
transaction which will have the effect of increasing the equity
ownership of such person in the corporation by more than one
percent (1%), unless prior to the consummation thereof each
holder of Preferred Shares shall have been given a reasonable
opportunity then to elect to receive, upon conversion of the
Preferred Shares then held by such holder, either the stock,
securities, cash or assets then issuable with respect to the
Common Shares or the stock, securities, cash or assets issued to
previous holders of the Common Shares in accordance with such
offer, or the equivalent thereof.
(xii) The number of Common Shares outstanding at any given time
shall not include shares owned or held by or for the account of
the corporation, for the purposes of this subsection 3(b).
(xiii) If a state of facts shall occur which, without being
specifically controlled
19
<PAGE>
by the provisions of this subsection 3(b), would not fairly
protect the conversion rights of the Preferred Shares in
accordance with the essential intent and principles of such
provisions, then the Board of Directors of the corporation shall
make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to
protect such conversion rights.
(xiv) Anything herein to the contrary notwithstanding, no
adjustment in a Conversion Rate shall be required unless such
adjustment, either by itself or with other adjustments not
previously made, would require a change of at least one
percent (1%) in such rate; and further provided that no
adjustment in the Conversion Rate shall be made with respect
to (i) any option issued to any employee or director of the
corporation or any options or shares issued pursuant to a
dividend reinvestment plan or employee stock ownership or
savings plans, (ii) any transaction pursuant to which Common
Shares are issued and sold or issuable pursuant to any
warrants, options, other rights or Convertible Securities and
the difference between the Consideration received or to be
received for such Common Shares (including any consideration
paid or given to purchase any warrant, option, other right or
Convertible Security) and the fair market value of such Common
Shares on the date of such sale or issuance is less than
$10,000,000, or (iii) any transaction pursuant to which Common
Shares are issuable for other than cash and the Board of
Directors has made a good faith determination that the
consideration received for such Common Shares is equal to the
fair market value of such Common Shares; provided, however,
that any adjustment which by reason of this subsection
3(b)(xiv) is not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(xv) All calculations under this subsection 3(b) shall be made
to the nearest one-thousandth of a share.
20
<PAGE>
(xvi) Whenever a Conversion Rate shall be adjusted pursuant to
this subsection 3(b), the corporation shall forthwith obtain, and
cause to be delivered to each holder of Preferred Shares, a
certificate signed by the principal financial or accounting
officer of the corporation, setting forth in reasonable detail
the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis
on which the Board of Directors of the corporation determined the
fair value of any consideration other than cash pursuant to
subsection 3(b)(ix)) and specifying the new Conversion Rate. In
the case referred to in subsection 3(b)(x), such a certificate
shall be issued describing the amount and kind of stock,
securities, property or assets or cash which shall be receivable
upon conversion of the Preferred Shares after giving effect to
the provisions of such subsection (b)(x).
(c) RESERVATION AND VALIDITY OF COMMON SHARES. The corporation
covenants and agrees that all Common Shares which may be issued
upon the exercise of the rights represented by each Preferred Share
will, upon issuance, be legally and validly issued, fully paid, and
nonassessable and free from all taxes, liens, and charges with
respect to the issue thereof except to the extent created by a
holder thereof and without limiting the generality of the
foregoing, the corporation agrees that it will from time to time
take all such action as may be required to assure that the par
value per share of the Common Shares is at all times equal to or
less than the consideration which would then be deemed to be
received by the corporation for the issuance of such Common Shares
pursuant to the exercise of any conversion rights relating to the
Preferred Shares. The corporation further covenants and agrees
that during the period within which the rights represented by the
Preferred Shares may be exercised, the corporation will at all
times have authorized and reserved a sufficient number of its
Common Shares to provide for the exercise of the rights represented
by the Preferred Shares and will at its expense expeditiously upon
each registration of shares use its best efforts to procure the
listing thereof (subject to issuance
21
<PAGE>
or notice of issuance) on all stock exchanges on which the Common
Shares are then listed.
(d) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Preferred
Shares. If, upon the conversion of any Preferred Shares as an
entirety, the holder would, except for the provisions of this
subparagraph, be entitled to receive a fractional Common Share, then
an amount equal to such fractional share multiplied by the "fair
market value" of a Common Share shall be paid by the corporation in
cash to such holder.
(e) "FAIR MARKET VALUE"; "CURRENT MARKET PRICE". Whenever Common
Shares of the corporation shall be regularly traded in any market, the
"fair market value" of the Common Shares shall be deemed to mean the
closing sales price of Common Shares on the principal national
securities exchange on which the Common Shares may at any time be
listed, or, if there shall have been no sales on any such exchange on
such day, the average of the bid and asked prices at the end of such
day, or, if the Common Shares shall not be so listed, the average of
the high bid and low asked prices in the over-the-counter market on
such day as reported on NASDAQ (if so quoted) or by the National
Quotation Bureau, Inc., or, if not so traded, as determined in good
faith by or pursuant to the directions and authorization of the Board
of Directors of the corporation, in each such case as of the business
day prior to the day as of which "fair market value" is being
determined. The term "Current Market Price" per share of Common
Shares at any date shall for purposes of this Section 3 be deemed to
be the average of the "fair market value" of the Common Shares for the
10 consecutive business days immediately preceding the day in
question.
(f) NOTICE OF CAPITAL CHANGES. In case:
(i) the corporation shall declare a dividend on its Common
Shares payable in shares of its capital stock or Convertible
Securities or payable otherwise than out of earnings or
surplus (other than capital surplus); or
22
<PAGE>
(ii) the corporation shall authorize the issuance to all
holders of its Common Shares of options or warrants or other
rights to subscribe for or purchase its Common Shares,
Convertible Securities, or any subscription rights or
warrants; or
(iii) the corporation shall authorize the distribution to all
holders of its Common Shares of evidences of its indebtedness
or other property (other than cash dividends paid out of
earnings or surplus (other than capital surplus)), all
determined in accordance with generally accepted accounting
principles; or
(iv) the corporation shall fix a record date for approval of
any subdivision, combination, recapitalization or
reclassification of its Common Shares, or of any consolidation
or merger to which the corporation is a party and for which
approval of any shareholders of the corporation is required,
or of the sale, transfer or other disposition of all or
substantially all of the assets of the corporation, or any
other transaction whereby a Change of Control may be effected;
or
(v) the corporation shall fix a record date for approval of
the voluntary or involuntary dissolution, liquidation or
winding up of the corporation; then, in each of said cases,
the corporation shall give the holders of Preferred Shares
written notice, by registered mail, postage prepaid, of the
date of which (A) a record shall be taken for such dividend,
distribution or subscription rights or (B) such subdivision,
combination, recapitalization, reclassification,
consolidation, merger, sale, transfer, disposition,
dissolution, liquidation, winding up or other transaction
effecting a Change of Control shall take place, as the case
may be. Such notice shall also specify the date as of which
the holders of Common Shares of record shall participate in
such dividend, distribution or subscription rights, or shall
be entitled to exchange their Common Shares for securities or
other property deliverable upon such subdivision,
23
<PAGE>
combination, recapitalization, reclassification,
consolidation, merger, sale, transfer, disposition,
dissolution, liquidation or winding up, as the case may be.
Such written notice shall be given at least ten days prior to
the action in question and not less than ten days prior to the
record date in respect thereof.
(g) TRANSFER TAXES. The issuance of shares or certificates
for Common Shares upon the conversion of Preferred Shares
shall be made without charge to the converting holder of
record of such Preferred Shares for any tax in respect of the
issuance of such shares or certificates, and such certificates
shall be issued in the respective names of, or in such names
as may be directed by the holder of record of such Preferred
Shares; provided, however, that the corporation shall not be
required to pay any tax which may be payable in respect of any
transfer involving the issue and delivery of any such shares
or certificate in a name other than that of the holder of
record of the Preferred Shares converted, and the corporation
shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance
thereof shall have paid to the corporation the amount of such
tax or shall have established to the satisfaction of the
corporation that such tax has been paid.
4. REDEMPTIONS.
(a) The corporation shall redeem, to the extent permitted by law, on July
22, 1998 (the "Maturity Date") all of the Preferred Shares then outstanding
on the close of business on such date. Such redemption shall be at a
redemption price equal to the sum of $38.00 per share, plus accrued and
unpaid dividends thereon.
(b) On or after July 22, 1993, the Preferred Shares at the time
outstanding may be redeemed by the corporation, in whole or in part, at the
option of the corporation expressed by a resolution of its Board of
Directors, at any time and from time to time at a redemption price per
share equal to the percentage set forth below
24
<PAGE>
opposite the period in which such redemption occurs multiplied by $38.00,
plus accrued and unpaid dividends thereon to the date fixed for redemption:
Period Redemption Premium
July 22, 1993 through July 21, 1994 103.625%
July 22, 1994 through July 21, 1995 102.900
July 22, 1995 and thereafter 100.000
(c) In addition to the rights of the corporation to redeem Preferred
Shares pursuant to subsections 4(a) or (b), the holders of Preferred Shares
shall have the right to require the corporation to redeem Preferred Shares
in the manner and for the redemption price specified in Section 9 of the
Purchase Agreement.
(d) If pursuant to subsections 4(a) or (b), the corporation shall redeem
any Preferred Shares, the corporation shall give written notice of such
redemption to each holder of record of Preferred Shares to be redeemed
not less than thirty (30) nor more than sixty (60) days prior to the date
fixed for redemption, by certified mail enclosed in a postage paid envelope
addressed to such holder at such holder's address as the same shall appear
on the books of the corporation. Such notice shall (i) state that the
corporation has elected or is required to redeem such shares, (ii) state
the date fixed for redemption, (iii) state the amount payable on
redemption, (iv) state that the shares called for redemption are
convertible until the close of business on the day preceding the date fixed
for redemption and (v) call upon such holder to surrender to the
corporation on or after said date at its principal place of business
designated in such notice, a certificate or certificates representing the
number of Preferred Shares to be redeemed in accordance with such notice.
On or after the date fixed in such notice for redemption or on or after the
date on which the corporation shall be required to redeem Preferred Shares
in accordance with the provisions of the Purchase Agreement, each holder of
Preferred Shares to be so redeemed shall present and surrender the
certificate or certificates for such shares to the corporation at the place
designated by the corporation and thereupon the redemption price of such
shares shall be paid to,
25
<PAGE>
or to the order of, in immediately available funds, the person whose name
appears on such certificate or certificates as the owner thereof. From and
after the date fixed as the date for redemption, unless default shall be
made by the corporation in providing for the payment of the redemption
price pursuant to such notice, all rights of the holders of the Preferred
Shares so redeemed, except the right to receive the redemption price (but
without interest thereon) shall cease and terminate; provided, however,
that on or before the date fixed for redemption, the corporation shall
deposit with a bank or trust company having a capital stock and surplus of
at least $50,000,000 to be applied to the redemption of the Preferred
Shares so called for redemption, an amount sufficient to redeem all such
shares upon the date specified in the notice for redemption. Any moneys so
deposited which remain unclaimed at the end of three years from the date of
such deposit shall be repaid to the corporation, but the corporation shall
remain obligated to make payment thereof to the holders of such shares
entitled thereto (subject to any applicable escheat or similar laws). If
less than all of the outstanding shares of a series of Preferred Shares are
to be redeemed, such shares of such series as are to be redeemed shall be
allocated among the holders thereof in proportion to the respective numbers
of shares of such series held by them.
(e) Any Preferred Shares redeemed by the corporation shall be retired and
shall not be reissued and the corporation may from time to time take such
appropriate corporate action as may be necessary to reduce the authorized
Preferred Shares.
FIFTH: The number of directors of the corporation shall be fixed from time
to time by its Regulations and may be increased or decreased as therein
provided, but the number of directors shall in no event be fixed at less than
nine. The board of directors shall be divided into three classes, as nearly
equal in number as the then fixed number of directors permits, with the term of
office of one class expiring each year. At the annual meeting of shareholders
in 1984, directors of the first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors of the second class
shall be elected to hold office for a term expiring at the second succeeding
annual
26
<PAGE>
meeting and directors of the third class shall be elected to hold office for a
term expiring at the third succeeding annual meeting. At the annual meeting of
shareholders in 1985 and at each annual meeting of shareholders thereafter, the
successors to that class of directors whose term then expires shall be elected
to hold office for a term expiring at the third succeeding annual meeting. In
the event of any increase in the number of directors of the corporation, the
additional directors shall be similarly classified in such a manner that each
class of directors shall be as equal in number as possible. In the event of any
decrease in the number of directors of the corporation, such decrease shall be
effected in such a manner that each class of directors shall be as equal in
number as possible.
SIXTH: 1. (a) In addition to any affirmative vote required by law or by
these Amended Articles, and except as otherwise expressly provided in paragraph
2 of this Article Sixth:
(1) any merger or consolidation of the corporation or of
any Subsidiary (as hereinafter defined) with (A) any
Interested Shareholder (as hereinafter defined) or (B) any
other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate of any Interested Shareholder of any assets of the
corporation or of any Subsidiary having an aggregate Fair
Market Value (as hereinafter defined) of $5,000,000 or more;
or
(3) the issuance or transfer by the corporation or by any
Subsidiary (in one transaction or a series of transactions)
of any securities of the corporation or of any Subsidiary to
any Interested Shareholder or to any Affiliate of any
Interested Shareholder in exchange for cash, securities or
other property (or combination thereof) having an aggregate
Fair Market Value of $5,000,000 or more; or
27
<PAGE>
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of an Interested Shareholder or any Affiliate of
any Interested Shareholder; or
(5) any reclassification of securities (including any
reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any Subsidiary or any other transaction
(whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible
securities of the corporation or of any Subsidiary which is
directly or indirectly owned by any Interested Shareholder
or any Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of the
then outstanding Common Shares and Voting Preferred Shares of the
corporation entitled to a vote (the "Voting Shares"), voting as a single
class at a meeting of shareholders called for such purpose. Such
affirmative vote shall be required notwithstanding that no vote may be
required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(b) The term "Business Combination" as used in this Article Sixth
shall mean any transaction referred to in any one or more of clauses
(1) through (5) of subparagraph (a) of this paragraph 1.
2. The provisions of paragraph 1 of this Article Sixth shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law
and by any other provision of these Amended Articles, if all of the
conditions specified in either of the following subparagraphs (a) or (b)
are met:
(a) The Business Combination shall have been approved by a majority
of the Continuing Directors (as hereinafter defined) of the
corporation; provided, however, that such approval shall be effective
only if obtained at a meeting at which a Continuing Director Quorum
(as hereinafter defined) is present.
28
<PAGE>
(b) All of the following conditions shall have been met:
(1) The aggregate amount of (x) cash and (y) Fair Market Value
(determined as of the date of the consummation of the Business
Combination) of consideration other than cash, to be received per
share by holders of Common Shares in such Business Combination
shall be at least equal to the highest amount determined under
subclauses (A), (B) and (C) below:
(A) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees, if
any) paid by the Interested Shareholder for any Common Share
acquired by it (i) within the two-year period immediately
prior to the first public announcement of the proposal of
the Business Combination (the "Announcement Date") or (ii)
in the transaction in which it became an Interested
Shareholder, whichever is higher;
(B) the Fair Market Value per Common Share on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (the
"Determination Date"), whichever is higher; and
(C) the price per Common Share equal to the Fair Market
Value per Common Share determined pursuant to subparagraph
(b)(1)(B) above, multiplied by the ratio of (i) the highest
per share price (including brokerage commissions, transfer
taxes and soliciting dealers' fees, if any) paid by the
Interested Shareholder for any Common Share acquired by it
within the two-year period immediately prior to the
Announcement Date to (ii) the Fair Market Value per Common
Share on the first day in such two-year period on which the
Interested Shareholder acquired any Common Share.
(2) The aggregate amount of (x) cash and (y) Fair Market Value
(determined as of the date of the consummation of the Business
Combination) of consideration other than cash, to be received per
share by holders of any class of Preferred Shares shall be at
least equal to the highest amount
29
<PAGE>
determined under subclauses (A), (B), (C) and (D) below:
(A) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fee, if
any) paid by the Interested Shareholder for any shares of
such class of Preferred Shares acquired by it (i) within
the two-year period immediately prior to the Announcement
Date or (ii) in the transaction in which it became an
Interested Shareholder, whichever is higher;
(B) the highest preferential amount per share to which the
holders of such class of Preferred Shares would be entitled
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation
regardless of whether the Business Combination to be
consummated constitutes such an event;
(C) the Fair Market Value per share of such class of
Preferred Shares on the Announcement Date or on the
Determination Date, whichever is higher; and
(D) the price per Preferred Share equal to the Fair Market
Value per share of such class of Preferred Shares determined
pursuant to subparagraph (b)(2)(C) above, multiplied by the
ratio of (i) the highest per share price (including
brokerage commissions, transfer taxes and soliciting
dealers' fees, if any) paid by the Interested Shareholder
for any shares of such class of Preferred Shares acquired by
it within the two-year period immediately prior to the
Announcement Date to (ii) the Fair Market Value per share of
such class of Preferred Shares on the first day in such
two-year period on which the Interested Shareholder acquired
any share of such class of Preferred Shares.
The provisions of this subparagraph (b)(2) shall be required to
be met with respect to every class of outstanding Preferred
Shares, whether or not the Interested Shareholder has previously
acquired any shares of a particular class of Preferred Shares.
30
<PAGE>
(3) The consideration to be received by holders of Common Shares
or of a particular class of Preferred Shares shall be in cash or
in the same form as the Interested Shareholder has previously
paid for shares of each such class of Common Shares or Preferred
Shares, respectively. If the Interested Shareholder has paid for
shares of any class of Common Shares or Preferred Shares,
respectively, with varying forms of consideration, the form of
consideration for such class shall be either cash or that form
used to acquire the largest number of shares of such class
previously acquired by the Interested Shareholder.
(4) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business
Combination: (A) except as approved by a majority of the
Continuing Directors, there shall have been no failure to
declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on outstanding Preferred
Shares; (B) except as approved by a majority of the Continuing
Directors, there shall have been (i) no reduction in the annual
rate of dividends paid on Common Shares (except as necessary to
reflect any subdivision of the Common Shares); and (ii) an
increase in such annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding Common
Shares; and (C) such Interested Shareholder shall not have become
the beneficial owner of any additional Common or Preferred Shares
of the corporation except as part of the transaction which
results in such Interested Shareholder becoming an Interested
Shareholder. The approval by a majority of the Continuing
Directors of any exception to the requirements set forth in
clauses (A) and (B) above shall be effective only if obtained at
a meeting at which a Continuing Director Quorum is present.
(5) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received
the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or
other financial assistance
31
<PAGE>
or any tax credits or other tax advantages provided by the
corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(6) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions amending or replacing
such Act, rules or regulations) shall be mailed to all
shareholders of the corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant
to such Act, rules, regulations or subsequent provisions).
3. For the purposes of this Article Sixth:
(a) The term "person" shall mean any individual, firm, partnership,
corporation or other entity.
(b) The term "Interested Shareholder" shall mean any person (other
than the corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee
benefit plan of the corporation or of any Subsidiary or any
trustee of or fiduciary with respect to any such plan when
acting in such capacity) who or which:
(1) is the beneficial owner (as hereinafter defined) of 10% or
more of the outstanding Voting Shares; or
(2) is an Affiliate (as hereinafter defined) of the corporation
and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of 10% or more of
the outstanding Voting Shares; or
(3) is an assignee of or has otherwise succeeded to any
outstanding Voting Shares which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not
32
<PAGE>
involving a public offering within the meaning of the Securities
Act of 1933.
(c) A person shall be deemed the "beneficial owner" of any Voting
Shares:
(1) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly;
or
(2) which such person or any of its Affiliates or Associates
has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
Voting Shares.
(d) For the purposes of determining whether a person is an Interested
Shareholder pursuant to subparagraph (b) of this paragraph 3, the
number of Voting Shares deemed to be outstanding shall include shares
deemed owned through application of subparagraph (c) of this paragraph
3 but shall not include any other Voting Shares which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(e) The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule l2b-2 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as in effect on March 1,
l984.
(f) The term "Subsidiary" means any corporation of which a majority
of any class of equity
33
<PAGE>
security is owned, directly, or indirectly, by the corporation;
provided, however, that for the purposes of the definition of
Interested Shareholder set forth in subparagraph (b) of this paragraph
3, the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the corporation.
(g) The term "Continuing Director" means any member of the board of
directors of the corporation who is unaffiliated with the Interested
Shareholder and was a member of the board of directors prior to the
time that the Interested Shareholder became an Interested Shareholder,
and any successor of a Continuing Director who is unaffiliated with
the Interested Shareholder and is either recommended or elected to
succeed a Continuing Director by a majority of Continuing Directors,
provided that such recommendation or election shall be effective only
if made at a meeting at which a Continuing Director Quorum is present.
(h) The term "Continuing Director Quorum" means that number of
Continuing Directors constituting at least two-thirds of the whole
authorized number of directors of the corporation, but in any event
not fewer than six Continuing Directors, capable of exercising the
powers conferred upon them under the provisions of these Amended
Articles or the Amended Regulations of the corporation or by law.
(i) The term "Fair Market Value" means: (1) in the case of shares,
the highest closing sale price of a share during the 30-day period
immediately preceding the date in question on the Composite Tape for
New York Stock Exchange-Listed Stocks, or, if the sale price of such
share is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such shares are not listed on such Exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such shares are listed, or,
if such shares are not listed on any such exchange, the highest
closing bid quotation with respect to a share during the 30-day period
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system
then in use, or, if no such quotations are
34
<PAGE>
available, the fair market value on the date in question of such share
as determined by the board of directors of the corporation in good
faith; and (2) in the case of property other than cash or shares, the
fair market value of such property on the date in question as
determined in good faith by a majority of Continuing Directors,
provided that such determination shall be effective only if made at a
meeting at which a Continuing Director Quorum is present.
(j) The term "Common Shares" shall mean Common Shares of the
corporation or, where appropriate for purposes of subparagraph (b) of
paragraph 2 of this Article Sixth, of Cincinnati Bell Inc. prior to
July 1, 1983.
(k) The term "Preferred Shares" shall mean Voting Preferred Shares,
Non-Voting Preferred Shares and any other class of Preferred Shares
which may from time to time be authorized in or by these Amended
Articles and which by the terms of its issuance is specifically
designated "Preferred Shares" for purposes of this Article Sixth.
(l) In the event of any Business Combination in which the corporation
survives, the phrase "consideration, other than cash, to be received "
as used in subparagraphs (b)(1) and (2) of paragraph 2 of this
Article Sixth shall include Common Shares and/or any other Voting
Shares retained by the holders of such shares.
4. Nothing contained in this Article Sixth shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.
5. Notwithstanding any other provisions of these Amended Articles or the
Amended Regulations of the corporation (and notwithstanding that a lesser
percentage may be specified by law, these Amended Articles or the Amended
Regulations of the corporation), the affirmative vote of the holders of at
least 80% of the then outstanding Voting Shares, voting as a single class
at a meeting of shareholders called for such purpose, shall be required to
amend or repeal, or adopt any provisions of these Amended Articles
inconsistent with, this Article Sixth; provided, however, that if the board
of directors of the corporation has recommended such amendment, repeal or
adoption, and if, as of the record date for the
35
<PAGE>
determination of shareholders entitled to vote thereon, no person is known
by the board of directors to be an Interested Shareholder, then the
affirmative vote of the holders of only two-thirds of the then outstanding
Voting Shares, voting as a single class at a meeting of shareholders called
for such purpose, shall be required to amend or repeal, or adopt any
provisions inconsistent with, this Article Sixth.
SEVENTH: The corporation, by action of the board of directors and without
action by the shareholders, may purchase its shares of any class for the
purposes and to the extent permitted by law.
EIGHTH: Notwithstanding any provision of the General Corporation Law of
Ohio now or hereafter in effect, no shareholder shall have the right to vote
cumulatively in the election of directors. Without limiting the generality of
the preceding sentence, no shareholder shall have the right at any time in the
election of directors either to give one candidate as many votes as the number
of directors to be elected multiplied by the number of his votes equals or to
distribute his votes on the same principle among two or more candidates.
NINTH: These Amended Articles of Incorporation supersede and take the
place of the existing Amended Articles of Incorporation.
36
<PAGE>
- --------------------------------------------------------------------------------
CINCINNATI BELL INC.
and
THE FIFTH THIRD BANK
Rights Agent
RIGHTS AGREEMENT
Dated as of April 29, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
RIGHTS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. CERTAIN DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.. . . . . . . . . . . . . . . . . 8
SECTION 3. ISSUE OF RIGHT CERTIFICATES.. . . . . . . . . . . . . . . . . 8
SECTION 4. FORM OF RIGHT CERTIFICATES. . . . . . . . . . . . . . . . . . 11
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.. . . . . . . . . . . . . . 12
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. . . . . . 18
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. . . . . . . 19
SECTION 10. PREFERRED SHARES RECORD DATE. . . . . . . . . . . . . . . . . 21
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS.. . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.. . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.. . . . . . . . . . . 42
SECTION 15. RIGHTS OF ACTION. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.. . . . . . . . . . . . . . . . . 46
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.. . . . . . 47
SECTION 18. CONCERNING THE RIGHTS AGENT.. . . . . . . . . . . . . . . . . 47
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.. . 48
SECTION 20. DUTIES OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . 49
SECTION 21. CHANGE OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . 53
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. . . . . . . . . . . . . . 54
SECTION 23. REDEMPTION AND TERMINATION. . . . . . . . . . . . . . . . . . 55
SECTION 24. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 25. NOTICE OF CERTAIN EVENTS. . . . . . . . . . . . . . . . . . . 57
SECTION 26. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 27. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . 59
SECTION 28. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . 60
i
<PAGE>
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.. . 60
SECTION 30. BENEFIT OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . 61
SECTION 31. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 32. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 33. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 34. DESCRIPTIVE HEADINGS. . . . . . . . . . . . . . . . . . . . . 62
EXHIBIT A FORM OF CERTIFICATE OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION OF CINCINNATI BELL INC. . . . . . . . . . . . . A-i
EXHIBIT B FORM OF RIGHTS CERTIFICATE . . . . . . . . . . . . . . . . . B-i
EXHIBIT C SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES. . . . . . . . C-i
ii
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of April 29, 1997, between Cincinnati Bell Inc., an
Ohio corporation (the "Corporation"), and The Fifth Third Bank, an Ohio
corporation (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one Right on each Common Share (as hereinafter defined) of the
Corporation outstanding at the close of business on May 2, 1997 (the "Record
Date"), each right representing the right to purchase one one-hundredth (1/100)
of a Series A Preferred Share, without par value, of the Corporation having the
rights and preferences set forth in the Form of Certificate of Amendment to
Amended Articles of Incorporation of Cincinnati Bell Inc. attached hereto as
Exhibit A, upon the terms and subject to the conditions herein set forth (the
"Rights"), and has further authorized the issuance of one Right with respect to
each Common Share of the Corporation that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Expiration Date and
the Final Expiration Date (as such terms are hereinafter defined), except as
otherwise shall be provided herein.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined) who
or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 15% or more of the Common Shares of the Corporation then
outstanding, but shall not include an Exempt Person (as such term is hereinafter
defined); PROVIDED, HOWEVER, that if the Board of Directors of the Corporation
<PAGE>
determines in good faith that a Person who would otherwise be an "Acquiring
Person" has become such inadvertently (including, without limitation, because
(i) such Person was unaware that it beneficially owned a percentage of Common
Shares that would otherwise cause such Person to be an "Acquiring Person" or
(ii) such Person was aware of the extent of its Beneficial Ownership of Common
Shares but had no actual knowledge of the consequences of such Beneficial
Ownership under this Rights Agreement) and without any intention of changing or
influencing control of the Corporation, and such Person, as promptly as
practicable after being advised of such determination divested or divests
himself, herself or itself of Beneficial Ownership of a sufficient number of
Common Shares so that such Person would no longer be an Acquiring Person, then
such Person shall not be deemed to be or to have become an "Acquiring Person"
for any purposes of this Agreement. Notwithstanding the foregoing, (i) if a
Person would be deemed an Acquiring Person upon the adoption of this Agreement
because of ownership of 15% or more but less than 20% of the Common Shares on
such date, such Person will not be deemed an Acquiring Person for any purposes
of this Agreement unless and until such Person acquires Beneficial Ownership of
any additional Common Shares (other than pursuant to a dividend or distribution
paid or made by the Corporation on the outstanding Common Shares in Common
Shares or pursuant to a split or subdivision of the outstanding Common Shares),
after the adoption of this Agreement unless upon the consummation of the
acquisition of such additional Common Shares such Person does not own 15% or
more of the Common Shares then outstanding, and (ii) no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares by the
Corporation which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
2
<PAGE>
of the Common Shares then outstanding, PROVIDED, HOWEVER, that if a Person shall
become the Beneficial Owner of 15% or more of the Common Shares then outstanding
by reason of such share acquisitions by the Corporation and thereafter become
the Beneficial Owner of any additional Common Shares (other than pursuant to a
dividend or distribution paid or made by the Corporation on the outstanding
Common Shares in Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), then such Person shall be deemed to be an "Acquiring
Person" unless upon the consummation of the acquisition of such additional
Common Shares such Person does not own 15% or more of the Common Shares then
outstanding. For all purposes of this Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof.
(b) "Act" shall mean the Securities Act of 1933.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (the
"General Rules") promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", any securities:
3
<PAGE>
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing), (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than these Rights
at any time prior to the occurrence of a Triggering Event (as hereinafter
defined) but thereafter including Rights acquired from and after the
Distribution Date (as hereinafter defined) other than Rights acquired pursuant
to Section 3(a), Section 11(i) and Section 22 hereof), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote or dispose of or "beneficial
ownership" (as determined pursuant to Rule 13d-3 of the General Rules) of
(including pursuant to any agreement, arrangement or understanding, whether or
not in writing); PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this clause (B)
as a result of an agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding (1) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the
4
<PAGE>
applicable rules and regulations of the Exchange Act, and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person or
any of such Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the proviso to
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Corporation.
(e) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., New York
City time, on such date; PROVIDED, HOWEVER, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
(g) "Common Shares" when used with reference to the Corporation shall mean
the Common Shares, par value $1.00 per share, of the Corporation. "Common
Shares" when used with reference to any Person other than the Corporation shall
mean the capital stock of such Person with the greatest voting power (or, if
such Person is a subsidiary of another Person, of the Person which ultimately
controls such first-mentioned Person), or the equity securities or other equity
interest having power to control or direct the management of such Person.
(h) "Common Share Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
5
<PAGE>
(i) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(j) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(k) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(l) "equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.
(m) "Exchange Act" shall have the meaning set forth in Section 1(d)
hereof.
(n) "Exempt Person" shall mean the Corporation, any Subsidiary (as such
term is hereinafter defined) of the Corporation, in each case including, without
limitation, in its fiduciary capacity, or, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation, or any entity or trustee
holding Common Shares for or pursuant to the terms of any such plan or for the
purpose of funding any such plan or funding other employee benefits for
employees of the Corporation or of any Subsidiary of the Corporation.
(o) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(p) "Final Expiration Date" shall mean the close of business on May 2,
2007.
(q) "Person" shall mean any individual, firm, corporation, partnership or
other entity and shall include any successor (by merger or otherwise) of such
entity.
(r) "Preferred Shares" shall mean Series A Preferred Shares, without par
value, of the Corporation.
(s) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
6
<PAGE>
(u) "Record Date" shall have the meaning set forth in the second paragraph
of this Agreement.
(v) "Redemption Price" shall have the meaning set forth in section 23(a)
hereof.
(w) "Rights" shall have the meaning set forth in the second paragraph of
this Agreement.
(x) "Rights Certificates" shall have the meaning set forth in Section 3
hereof.
(y) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(z) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
section 11(a)(iii) hereof.
(aa) "Section 13 Event" shall mean any event described in Clause (i), (ii)
or (iii) of Section 13(a) hereof.
(bb) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition shall include, without
limitation, a report filed pursuant to Section 13(d) promulgated under the
Exchange Act) by the Corporation or by an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the Board of
Directors shall become aware of the existence of an Acquiring Person.
(cc) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(dd) "Subsidiary" shall mean, with reference to any Person, any corporation
of which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned,
7
<PAGE>
directly or indirectly, by such Person, and any corporation or other entity that
is otherwise controlled by such Person.
(ee) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ff) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(gg) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Any determination required by the definitions contained in this Section
shall be made by the Board of Directors of the Corporation in their good faith
judgment, which determination shall be final and binding on the Rights Agent.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby appoints
the Rights Agent to act as agent for the Corporation in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of (i) the
close of business on the tenth Business Day after the Shares Acquisition Date,
or (ii) the close of business on the tenth Business Day after the date of the
commencement of, or first public announcement of the intent to commence, a
tender or exchange offer by any Person (other than an Exempt Person) if upon
consummation thereof, any such Person other than an Exempt Person would be the
Beneficial Owner of 15% or more of the Common Shares then outstanding (the
earlier of such dates, including any such date which is after the date of this
Agreement and prior to the issuance of the Rights, being herein referred to as
the "Distribution Date"): (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for
8
<PAGE>
Common Shares registered in the names of the holders thereof (which certificates
for Common Shares shall be deemed also to be Right Certificates) and not by
separate Right Certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares (including a
transfer to the Corporation). As soon as practicable after the Distribution
Date, the Rights Agent will send, by first-class, insured, postage prepaid mail,
or, if requested by or on behalf of a holder, shall otherwise deliver, to each
record holder of Common Shares as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Corporation, one
or more Right Certificates, in substantially the form of Exhibit B hereto (the
"Right Certificates"), evidencing one Right for each Common Share so held,
subject to adjustment. In the event that an adjustment in the number of Rights
per Common Share has been made pursuant to Section 11(p) hereof, at the time of
distribution the Corporation shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Right Certificates
evidencing only whole numbers of Rights are distributed and cash is paid in lieu
of fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the Corporation
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder shown
on the records of the Corporation. With respect to certificates for Common
Shares outstanding as of the Record Date until the Distribution Date, the Rights
will be evidenced by such certificates for Common Shares registered in the names
of the holders thereof, and the
9
<PAGE>
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier Expiration
Date or Final Expiration Date), the transfer of any certificate for Common
Shares in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Rights shall be issued in respect of all Common Shares that shall
become outstanding after the Record Date but prior to the earliest of the
Distribution Date or the Expiration Date or the Final Expiration Date, except as
otherwise provided in Section 11(p). Certificates representing such Common
Shares (and certificates delivered pursuant to Sections 6 and 7(d)) shall also
be deemed to be Right Certificates, and shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between
Cincinnati Bell Inc. and The Fifth Third Bank, as Rights Agent,
dated as of April 29, 1997 as the same may be amended from time
to time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file
at the principal executive offices of Cincinnati Bell Inc. and
available for inspection by the holder of this certificate.
Under certain circumstances set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. Cincinnati Bell Inc.
will mail to the holder of this certificate a copy of the Rights
Agreement without charge within five days after receipt of a
written request therefor. Under certain circumstances set forth
in the Rights Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become
null and void. In no event may the Rights be exercised after
May 2, 2007.
With respect to such certificates containing the foregoing legend, until
the Distribution Date (or the earlier Expiration or Final Expiration Date), the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone and
10
<PAGE>
registered holders of Common Shares shall also be the registered holders of the
associated Rights, and the transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases or otherwise
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed cancelled
and retired so that the Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Corporation may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever issued, shall be dated as of the Distribution Date, and
on their face shall entitle the holders thereof to purchase such number of
Preferred Shares as shall be set forth therein at the price per share set forth
therein (the "Purchase Price"), but in any event the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
11
<PAGE>
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which is part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Right Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible and otherwise reasonably
identifiable as such) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Corporation by its Chairman of the Board,
President or any Vice President, either manually or by facsimile signature, and
have affixed thereto the Corporation's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the
12
<PAGE>
Corporation, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Corporation
who shall have signed any of the Right Certificates shall cease to be such
officer of the Corporation before countersignature by the Rights Agent and
issuance and delivery by the Corporation, such Right Certificates nevertheless
may be countersigned by the Rights Agent, and issued and delivered by the
Corporation, with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Corporation; and any
Right Certificate may be signed on behalf of the Corporation by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Corporation to sign such Right Certificate, although at the date
of the execution of this Rights Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at one of its offices in the United States, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, the
Right Certificate number and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Expiration Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to
13
<PAGE>
purchase a like number of Preferred Shares (or, following a Triggering Event,
Common Shares, other securities or property, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Neither the
Rights Agent nor the Corporation shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and the Corporation shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Corporation may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Subject to the provisions of Section 7(e) hereof, at any time after the
Distribution Date and prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, upon receipt by the Corporation
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the
14
<PAGE>
Corporation's request, reimbursement to the Corporation and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Corporation
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purposes, together
with payment of the Purchase Price with respect to each surrendered Right for
the total number of shares (or other securities or property, as the case may be)
as to which such surrendered Rights are exercisable, at or prior to the earlier
of (i) the Final Expiration Date; (ii) the time at which the Rights are redeemed
as provided in Section 23 (such earlier time being herein referred to as the
"Expiration Date"); or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof. At the close of business on the Final Expiration
Date, the Rights shall become null and void.
(b) The "Purchase Price" for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $125, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
15
<PAGE>
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right (in cash, or by certified
bank check or money order payable to the order of the Corporation) of the
Purchase Price for the shares (or other securities or property, as the case may
be) to be purchased and an amount equal to any applicable transfer tax, the
Rights Agent shall thereupon promptly (i) (A) requisition from the Corporation
or any transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of Preferred Shares to
be purchased and the Corporation will comply and hereby authorizes its transfer
agent to comply with all such requests, or (B) if the Corporation shall have
elected to deposit the Preferred Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Corporation hereby directs the
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Corporation the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event that the
Corporation is obligated to issue other securities (including Common Shares) of
the Corporation, pay cash and/or distribute other property pursuant to Section
11(a)
16
<PAGE>
hereof, the Corporation will make all arrangements necessary so that such other
securities, cash and/or property are available for distribution by (or on behalf
of) the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of a Triggering Event, any Rights beneficially owned by (a)
an Acquiring Person, or an Associate or Affiliate of an Acquiring Person, (b) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (c) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (i) a transfer (whether or not
for consideration) from the Acquiring Person (or from any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or in any
such Associate or Affiliate) or to any Person with whom the Acquiring Person (or
any such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (ii) a transfer which the
Board of Directors otherwise concludes in good faith (whether before or after
such transfer) is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), and subsequent
transferees of such Persons, shall become null and void without any
17
<PAGE>
further action, and any holder of such Rights shall thereupon have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise, from and after the occurrence of a Triggering Event.
The Corporation shall use all reasonable efforts to insure that the provisions
of this Section 7(e) and Section 4(b) hereof are complied with, but shall have
no liability to any holder of Rights or other Person for the inability to make
any determinations with respect to an Acquiring Person or their Affiliates,
Associates or transferees hereunder. No Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that are or
have become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this paragraph shall be
cancelled. The Corporation will inform the Rights Agent of any rights that are
of have become void pursuant to the provisions of this paragraph.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Corporation shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
transfer or exercise as set forth in Section 6 or in this Section 7 unless the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such transfer
or exercise shall have been completed and signed by the registered holder
thereof and the Corporation shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Corporation shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if
18
<PAGE>
surrendered to the Corporation or to any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Rights Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation otherwise
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Corporation, or shall, at the written request of the
Corporation, destroy such cancelled Right Certificates and deliver a certificate
of destruction thereof to the Corporation.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. The
Corporation covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares and/or other securities) or
any authorized and issued Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) held in its treasury,
the number of Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) that will be sufficient (in
accordance with the terms of this Agreement, including Section 11(a)(iii)
hereof) to permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange or
quotation system, the Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
19
<PAGE>
issuance to be listed on such exchange or quotation system upon official notice
of issuance in connection with such exercise.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, a registration
statement under the Securities Act of 1933 (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the date of the expiration of the Rights. The Corporation will also take
such action as may be appropriate under the blue sky laws of the various states.
The Corporation may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare and file
such registration statement or in order to comply with such blue sky laws. Upon
any such suspension, the Corporation shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
The Corporation covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
20
<PAGE>
The Corporation further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) upon the exercise of Rights. The
Corporation shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates for the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or deliver
any certificates for Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Corporation's satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other
21
<PAGE>
securities, as the case may be) transfer books of the Corporation are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Shares (or Common Shares and/or other securities, as the case may
be) transfer books of the Corporation are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a shareholder of the Corporation with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Corporation, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of shares or (D) issue
any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the
22
<PAGE>
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Shares transfer books of the Corporation were open, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED HOWEVER, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Corporation
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required by Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person then, promptly following the first occurrence
of a Section 11(a)(ii) Event, proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof) shall hereafter
have the right to receive, upon exercise thereof at the then-current Purchase
Price in accordance with the terms of this Agreement, in lieu of a number of one
one-hundredths of a Preferred Share, such number of Common Shares of the
Corporation as shall equal the result obtained by (x) multiplying the then-
current Purchase Price by the then-number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which,
following such first occurrence shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of the
current per share market price (determined pursuant to Section 11(d) hereof) of
the Common Shares on the date of such first occurrence (such number of shares,
the "Adjustment Shares"); PROVIDED, HOWEVER, that
23
<PAGE>
the Purchase Price and the number of Common Shares so receivable upon exercise
of a Right shall thereafter be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof.
(iii) The Corporation may at its option (evidenced by a certified
resolution of the Corporation's Board of Directors delivered to the Rights
Agent) substitute for a Common Share issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii) such number of fractions of
Preferred Shares having an aggregate current market value equal to the current
per share market price of a Common Share. In the event that the number of
Common Shares which are authorized by the Corporation's Articles of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Corporation shall to the extent permitted by applicable law
and any material agreement then in effect to which the Corporation is a party:
(A) determine the excess of (1) the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, (other than Rights
which have become void pursuant to Section 7(e)) make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Shares or
other equity securities of the Corporation (including, without limitation,
preferred shares which the Board of Directors of the Corporation has deemed to
have the same value as Common Shares (such preferred shares, "common share
equivalents")), (4) debt securities of the Corporation, (5) other assets, or (6)
any combination of the foregoing, having an aggregate value equal to the Current
Value (less the
24
<PAGE>
amount of any reduction in the Purchase Price), where such aggregate value has
been determined by the Board of Directors of the Corporation based upon the
advice of one or more investment or financial advisors selected by the Board of
Directors of the Corporation; provided, however, if the Corporation shall not
have made adequate provisions to deliver value pursuant to clause (B) above
within thirty (30) days following the first occurrence of a Section 11(a)(ii)
Event (the "Section 11(a)(ii) Trigger Date"), then the Corporation shall be
obligated to deliver, to the extent permitted by applicable law and any material
agreement then in effect to which the Corporation is a party, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available) and then, if necessary, such number of
Preferred Shares or fractions of Preferred Shares (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors of the Corporation shall determine in
good faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Corporation may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Corporation determines that some action need
be taken pursuant to the second and/or third sentences of this Section
11(a)(iii), the Corporation (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such second sentence and to determine
25
<PAGE>
the value thereof. In the event of any such suspension, the Corporation shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Shares shall be the current per share market price (as
determined pursuant to Section 11(d) hereof) of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any "common share equivalents" shall be
deemed to have the same value as the Common Shares on such date.
(iv) In lieu of issuing Common Shares in accordance with
subparagraph (ii) of this Section 11(a), the Corporation may with respect to
each Right, if a majority of members of the Board of Directors determines that
such action is in the best interests of the Corporation and not contrary to the
interests of the holders of Rights, make adequate provision to substitute for
the Adjustment Shares, (x) upon the surrender for exercise of a Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in Purchase
Price, (3) Common Shares, or other equity securities of the Corporation
(including without limitation common share equivalents), (4) debt securities of
the Corporation, (5) other assets or (6) any combination of the foregoing having
an aggregate value equal to the Current Value where such aggregate value has
been determined by the Board of Directors of the Corporation based upon the
advice of one or more investment or financial advisers selected by the Board of
Directors of the Corporation or (y) upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, (1) cash, (2) Common Shares
or other equity securities of the Corporation (including, without limitation,
common share equivalents), (3) debt securities of the Corporation, (4) other
assets or (5) any combination of the foregoing, having an aggregate value equal
to the Spread
26
<PAGE>
where such aggregate value has been determined by the Board of Directors of the
Corporation based upon the advice of one or more investment or financial
advisors selected by the Board of Directors of the Corporation.
(b) In the event the Corporation shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible) PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
27
<PAGE>
Corporation issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent (and shall be binding on
the Rights Agent and the holders of the Rights). Preferred Shares owned by or
held for the account of the Corporation shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In the event the Corporation shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular periodic cash dividend out of the
earnings or the retained earnings of the Corporation or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the Preferred Shares (as defined in Section
11(d)) on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
28
<PAGE>
subscription rights or warrants applicable to one Preferred Share, and the
denominator of which shall be such current per share market price of the
Preferred Shares PROVIDED, HOWEVER, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Corporation to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) and Section 11(a)(iv) hereof,
the "current per share market price" of the Preferred Shares on any date shall
be deemed to be the average of the daily closing prices per share of such
Preferred Shares for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; PROVIDED, HOWEVER, that in
the event that the current per share market price of the Preferred Shares is
determined during a period following the announcement by the issuer of such
Preferred Shares of (A) a dividend or distribution on such Preferred Shares
payable in such Preferred Shares or securities convertible into such Preferred
Shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Preferred Shares, and prior to the expiration of the
requisite 30 Trading Day period after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current per share market
price" shall be appropriately adjusted to take into account ex-dividend trading.
The closing price for each Trading Day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
29
<PAGE>
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Preferred Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Preferred Shares are listed or admitted to trading or, if the
Preferred Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
Preferred Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Preferred Shares selected by the Board of Directors of the
Corporation. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Preferred Shares are listed or
admitted to trading is open for the transaction of business or, if the Preferred
Shares are not listed or admitted to trading on any national securities
exchange, a Business Day. If the current per share market price of the
Preferred Shares on any date cannot be determined in the manner provided above,
the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be an amount equal to one hundred (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring after the date of
this Agreement) multiplied by the current per share market price of the Common
Shares. If neither the Common Shares nor the Preferred Shares is publicly held
or so listed or traded, "current per share market price" shall
30
<PAGE>
mean the fair value per share as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) and Section 11(a)(iv) hereof,
the "current per share market price" of the Common Shares shall be determined in
the same manner set forth above for Preferred Shares in clause (i) of this
Section 11(d), PROVIDED, HOWEVER, for the purpose of any computation in Section
11(a)(iii) and Section 11(a)(iv) hereof, the "current per share market price" of
the Common Shares on any date shall be deemed to be the average of the daily
closing prices per Common Share for ten consecutive Trading Days immediately
following such date and the reference to the "30 Trading Day period" in Section
11(d)(i)(B) shall be the "ten Trading Day period."
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such Purchase Price; PROVIDED, HOWEVER,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or other share or one-
ten-thousandth of a Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
31
<PAGE>
(f) If as a result of an adjustment made pursuant to Section 11 or Section
13 hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a), (b), (c), (e), (g),
(h), (i), (j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election as provided
in Section 11(i), below, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one one-
hundredths of a Preferred Share (calculated to the nearest one-millionth)
obtained by (i) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
32
<PAGE>
(i) In lieu of the adjustment in the number of one one-hundredths
of a Preferred Share purchasable upon the exercise of a Right, the Corporation
instead may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of shares
or fraction of a Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Corporation
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if Right Certificates
have been issued, shall be at least 10 days later than the date of such public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Corporation, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be
33
<PAGE>
issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Corporation, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right Certificates on the
record date specified in such public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of Preferred Shares which were expressed
in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Preferred Shares
issuable upon exercise of the Rights, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
Preferred Shares and other capital stock or securities of the Corporation, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Corporation, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Corporation shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's
34
<PAGE>
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any of the Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, stock dividends
or issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Corporation to holders of its Preferred Shares shall not
be taxable to such shareholders.
(n) The Corporation covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with, (ii) merge with or into, or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to, any other Person if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take)
35
<PAGE>
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Corporation shall at any time after the date of this Agreement
and prior to the Distribution Date (i) pay a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number of shares, or
(iv) issue any shares of its capital stock in a reclassification of the
outstanding Common Shares, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
(including other Common Shares issued after the date of such event, but prior to
the Distribution Date) shall equal the result obtained by multiplying the number
of Rights associated with each Common Share immediately prior to such event by a
fraction the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of Common Shares outstanding immediately
following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Corporation shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 26 hereof.
36
<PAGE>
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event that, following the Distribution Date, directly or
indirectly, (i) the Corporation shall consolidate with, or merge with and into,
any other Person, and the Corporation shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) any Person shall consolidate
with the Corporation, or merge with and into the Corporation, and the
Corporation shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the Common Shares of the Corporation shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (iii) the Corporation shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Corporation and its Subsidiaries (taken as a whole and
calculated on the basis of the Corporation's most recent regularly prepared
financial statements) to any Person or Persons (other than the Corporation or
any Subsidiary of the Corporation), then, and in each such case, proper
provision shall be made so that (1) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then-current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as
hereinafter defined), not subject to any rights of first refusal or similar
rights, as shall be equal to the result obtained by (x) multiplying the then-
current Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable (or, if such Right is not currently
exercisable for a number of Preferred Shares, the number of such fractional
shares for which it
37
<PAGE>
was exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event and dividing that product by (y) 50% of the current per share market price
of the Common Shares of such Principal Party (determined pursuant to Section
11(d)(ii) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; PROVIDED that the Purchase Price and the number of Common
Shares of such Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in Section 11(f) of this Agreement to reflect any
events occurring in respect of such Principal Party after the date of such
consolidation, merger, sale or transfer; (2) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Corporation
pursuant to this Agreement; (3) the term "Corporation" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of an event set forth in Section 13(a) hereof;
(4) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares in accordance with
Section 9) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; PROVIDED that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had such holder, at the time of such transaction, owned the Common Stock
of the Principal Party
38
<PAGE>
receivable upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (5) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
event set forth in this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or (ii)
of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which the Common Shares are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer
of the shares of Common Stock which has the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person that
is the other party to the merger, if such Person survives said merger, or, if
there is more than one such Person, the Person the shares of Common Stock of
which have the greatest aggregate market value of shares outstanding or (y) if
the Person that is the other party to the merger does not survive the merger,
the Person that does survive the merger (including the Corporation if it
survives) or (z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in (iii) of
the first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if such Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be
39
<PAGE>
determined, whichever of such Persons as is the issuer of Common Stock having
the greatest aggregate market value of shares outstanding; PROVIDED, HOWEVER,
that in any case described in the foregoing clauses (b)(i) and (b)(ii), (1) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value or (3) if such Person
is owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in clauses (1) and (2) above shall apply to each of the owners
having an interest in the venture as if the Person owned by the joint venture
was a Subsidiary of both or all of such joint venturers, and the Principal Party
in each such case shall bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such interests.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have sufficient Common Shares
authorized to permit the full exercise of the Rights and prior thereto the
Corporation and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and that such consolidation, merger,
sale or transfer of assets shall not result in a default by the Principal Party
under this Agreement as the
40
<PAGE>
same shall have been assumed by the Principal Party pursuant to paragraphs (a)
and (b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange to list or admit to trading (or continue
the listing of) the Rights and the securities purchasable upon exercise of the
Rights on the New York Stock Exchange or such securities exchange, or, if the
Common Stock of the Principal Party shall not be listed or admitted to trading
on the New York Stock Exchange or a national securities exchange, to cause the
Rights and the securities receivable upon exercise of the Rights to be reported
by such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.
41
<PAGE>
(d) In case the Principal party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the then current market price per
share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then, in
such event, the Corporation hereby agrees with each holder of Rights that it
shall not consummate any such transaction unless prior thereto the Corporation
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event a Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
42
<PAGE>
(a) The Corporation shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any Trading Day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
similar system then in use or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Corporation. If on any such date no such
market maker is making a market in the Rights, the
43
<PAGE>
fair value of the Rights on such date as determined in good faith by the Board
of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a share may, at
the election of the Corporation, be evidenced by depositary receipts, pursuant
to an appropriate agreement between the Corporation and a depositary selected by
it, provided that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Shares. In lieu
of fractional Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Corporation shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a Preferred Share. For purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Corporation shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates which evidence fractional Common Shares. In lieu
of fractional Common Shares, the Corporation shall pay to the registered holders
of Right Certificates at the time such Rights are
44
<PAGE>
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Common Share. For purposes of this Section 14(c),
the current market value of one Common Share shall be the closing price of one
Common Share (as determined pursuant to of Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of any Common Shares), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Corporation to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
45
<PAGE>
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Corporation and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Corporation and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Corporation or the Rights Agent) for
all purposes whatsoever, and neither the Corporation nor the Rights Agent shall
be affected by any notice to the contrary.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any of
its obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided,
46
<PAGE>
however, the Corporation must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Corporation which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Corporation agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability or expense incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. This
47
<PAGE>
indemnification shall survive the expiration or termination of the Rights or
this Rights Agreement.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Preferred or Common Shares or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor Rights Agent, or
any Affiliate of the Rights Agent that undertakes the corporate trust or stock
transfer business of the Rights Agent as a result of transfer, assignment or any
other means, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent
48
<PAGE>
and deliver such Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Corporation and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation,
49
<PAGE>
the identity of any Acquiring Person and the determination of "current per share
market price") be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Corporation
and any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except as to its
countersignature thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any adjustment required under
the provisions of Sections 11 or 13 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
50
<PAGE>
Rights evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares to be purchased pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares or Common Shares
will, when so issued, be validly authorized and issued, fully paid and
nonassessable; nor will it be liable for any federal or state transfer taxes or
charges that may be due upon the issuance or transfer of any Preferred Share,
Common Share or Right Certificate.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, a Vice President, the Secretary
or the Treasurer of the Corporation, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with the
instructions of any such officer or for any delay in acting while waiting for
such instructions. When applying to any such officer for instructions, the
Rights Agent may set forth in writing (i) any proposed action or omission of the
Rights Agent with respect to its duties or obligations under this Agreement and
(ii) the date on or after which the Rights Agent proposes such action will be
taken or omitted. Such date shall not be less than three Business Days after
any such officer receives such application for instructions from the Rights
Agent, unless an earlier date is
51
<PAGE>
mutually agreed to by the parties. Unless the Rights Agent has received written
instructions from the Corporation (including any such officer) with respect to
such proposed action or omission prior to such date (or, if longer, in the case
of a proposed action to be taken, prior to the Rights Agent actually taking such
action), the Rights Agent shall not be liable for the actions or omissions set
forth in such application, provided that such action or omission does not
violate any express provisions of this Rights Agreement. The Rights Agent may
execute and exercise any of the rights or powers vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or for any other
legal entity.
(i) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
hereunder if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to the Rights Agent.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response
52
<PAGE>
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Corporation.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Corporation and to each transfer
agent of the Common Shares and the Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. The
Corporation may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares and the
Preferred Shares, by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Corporation shall
appoint a successor to the Rights Agent. If the Corporation shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Corporation), then the incumbent Rights Agent or the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
any state therein, in good standing, having a principal office in a state in the
United States, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by federal
or state authority and
53
<PAGE>
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares and the Preferred Shares, and as soon as practicable
thereafter mail a notice thereof in writing to the registered holders of the
Right Certificates (which notice may be included in any regularly scheduled
mailing to shareholders whether such mailing is by fist-class mail or
otherwise). Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and/or the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
54
<PAGE>
Section 23. REDEMPTION AND TERMINATION. (a) The Board of Directors of the
Corporation may, at its option, at any time prior to the Shares Acquisition
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Corporation shall give notice of such
redemption to the Rights Agent and to the holders of the then outstanding Rights
by mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. The failure to give notice or
any defect in notice shall not affect the validity of the redemption. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Corporation nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
and other than in connection with the repurchase of Common Shares prior to the
Distribution Date.
55
<PAGE>
Section 24. EXCHANGE. (a) The Board of Directors of the Corporation may,
at its option, at any time after any Person first becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have not become effective or that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, approximately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such amount per Right being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time (1) after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of Common Shares aggregating 50% or more of the
Common Shares then outstanding. From and after the occurrence of a Section 13
Event, any Rights that theretofore have not been exchanged pursuant to this
Section 24(a) shall thereafter be exercisable only in accordance with Section 13
and may not be exchanged pursuant to this Section 24(a). The exchange of the
Rights by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the effectiveness of the action of the Board of
Directors of the Corporation ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the
56
<PAGE>
validity of such exchange. The Corporation shall promptly mail a notice of any
such exchange to all of the holders of the Rights so exchanged at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) The Corporation may at its option and in the event that there shall
not be sufficient Common Shares issued but not outstanding or authorized but
unissued to permit an exchange of Rights as contemplated in accordance with this
Section 24, the Corporation shall substitute to the extent of such
insufficiency, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction thereof (or
equivalent preferred shares as such term is defined in Section 11(b)) such that
the current per share market price (determined pursuant to Section 11(d) hereof)
of one Preferred Share (or equivalent preferred share) multiplied by such number
or fraction is equal to the current per share market price of one Common Share
(determined pursuant to Section 11(d) hereof) as of the date of such exchange.
Section 25. NOTICE OF CERTAIN EVENTS. In case the Corporation shall
propose, at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of Preferred Shares (other than a regular
periodic cash dividend out of earnings or retained earnings of the
57
<PAGE>
Corporation) or (b) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, or (c)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to, any other Person, or (e) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall give to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Preferred Shares, whichever shall be the earlier.
In case any Section 11(a)(ii) Event shall occur, then, in any such case,
(i) the Corporation shall as soon as practicable thereafter give to each holder
of a Right Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event,
58
<PAGE>
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Section 26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Corporation shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Cincinnati Bell Inc.
201 East Fourth Street
Cincinnati, Ohio 45202
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Corporation or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Corporation) as follows:
The Fifth Third Bank
Corporate Trust Operations
Mail Drop 1090F5
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Subject to the provisions of Sections 19 and 21, notices or demands authorized
by this Agreement to be given or made by the Corporation or the Rights Agent to
the holder of any Right Certificate shall be sufficiently given or made if sent
by first class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Corporation.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Corporation
may in its sole and
59
<PAGE>
absolute discretion, and the Rights Agent shall if the Corporation so directs,
supplement or amend any provision of this Agreement in any respect without the
approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, except as otherwise provided in this Section 27, the
Corporation may, and the Rights Agent shall, if the Corporation so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner which the
Corporation may deem necessary or desirable; provided that no such supplement or
amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), and no such amendment may cause the Rights again to become redeemable
or cause the Agreement again to become amendable other than in accordance with
this sentence. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which decreases the
Redemption Price. Upon the delivery of a certificate from an appropriate
officer of the Corporation which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment.
Section 28. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Corporation or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. (a)
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any
60
<PAGE>
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
shall be made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the
General Rules. The Board of Directors of the Corporation shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the Corporation, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement. All such actions,
calculations, interpretations and determinations (including, for purpose of
clause (ii) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (i) be final, conclusive and binding
on the Corporation, the Rights Agent, the holders of the Right Certificates and
all other parties and (ii) not subject the Board to any liability to the holders
of the Right Certificates.
(b) For purposes of this Agreement, any determination to be made by the
Board of Directors of the Corporation may be by a duly constituted committee
thereof if so authorized to act by the Board of Directors pursuant to the
Corporation's Regulations, and in such circumstances any reference to the Board
of Directors herein shall be deemed to include a reference to such committee.
Section 30. BENEFIT OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Corporation, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common
61
<PAGE>
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, registered holders of the Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Ohio and for all purposes shall be governed by and
construed in accordance with the laws of Ohio applicable to contracts made and
to be performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
62
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: CINCINNATI BELL INC.
By /s/ William H. Zimmer /s/ John T. LaMacchia
------------------------- ---------------------------------------
William H. Zimmer John T. LaMacchia
Secretary President and Chief Executive Officer
Attest: THE FIFTH THIRD BANK
By /s/ Laura A. Hayden /s/ Dana S. Hushak
------------------------- ----------------------------------------
Dana S. Hushak
Name Laura A. Hayden Vice President and Trust Officer
-------------------------
Title Trust Officer
-------------------------
63
<PAGE>
Exhibit A Form of Certificate of Amendment to Amended Articles of
Incorporation of Cincinnati Bell Inc.
A-i
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
BY THE
BOARD OF DIRECTORS
OF
CINCINNATI BELL INC.
The undersigned, Brian C. Henry, Executive Vice President and Chief
Financial Officer, and William H. Zimmer III, Secretary, of Cincinnati Bell
Inc., an Ohio corporation (the "Corporation"), DO HEREBY CERTIFY that for and on
behalf of the Corporation as follows:
The following resolution to amend the Corporation's Amended Articles of
Incorporation was adopted by the Board of Directors of the Corporation, pursuant
to Section 1701.70(B)(1) of the Ohio Revised Code, at a meeting of such Board of
Directors duly called and held on March 3, 1997, at which meeting a quorum was
present. Of the 4,000,000 authorized Voting Preferred Shares of the
Corporation, without par value (the "Voting Preferred Shares"), of which all are
unissued, the following resolution was adopted to increase the number of
authorized shares of a series of such Voting Preferred Shares (the "Series A
Preferred Shares") from 250,000 to 2,000,000 and to read as follows:
RESOLVED FURTHER, that the first paragraph of Article
Fourth, Section 9, of the Corporation's Amended Articles of
Incorporation be amended and restated to increase the number
of authorized shares of the series from 250,000 to 2,000,000
and to read as follows:
Of the 4,000,000 Voting Preferred Shares of the corporation,
2,000,000 shall constitute a series of Voting Preferred
Shares designated as Series A Preferred Shares (the "Series
A Preferred Shares") and have, subject and in addition to
the other provisions of this Article Fourth, the following
relative rights, preferences and limitations:
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 23rd day of
April, 1997.
---------------------------------------------
Brian C. Henry, Executive Vice President and
Chief Financial Officer
---------------------------------------------
William H. Zimmer III, Secretary
<PAGE>
Exhibit B Form of Rights Certificate
B-i
<PAGE>
EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R-_________________ ___________ Rights
NOT EXERCISABLE AFTER MAY 2, 2007 OR EARLIER IF REDEEMED BY THE COMPANY (AS
DEFINED HEREINAFTER). THE RIGHTS ARE SUBJECT TO REDEMPTION. AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.](1)
Rights Certificate
CINCINNATI BELL INC.
This certifies that __________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Shareholder Rights Plan, the terms of which are set forth in the
Rights Agreement dated as of April 29, 1997 (the "Rights Agreement"), between
Cincinnati Bell Inc., an Ohio corporation (the "Company"), and The Fifth
Third Bank (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Cincinnati, Ohio time) on May 2, 2007 at the office
or offices of the Rights Agent designated for such purpose, or its successors
as Rights Agent, one one-hundredth of a fully paid, nonassessable Series A
Preferred Share (the "Preferred Shares") of the Company, at a purchase price
of $125 per one one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The Purchase
Price may be paid in cash or by certified bank check or money order payable
to the order of the Company. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above,
are the
- ----------
(1) The portion of the legend in brackets shall be inserted only if
applicable, shall be modified to apply to an Acquiring Person, as applicable,
and shall replace the preceding sentence.
<PAGE>
number and Purchase Price as of May 2, 1997, based on the Preferred Shares as
constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate
are beneficially owned by (i) an Acquiring Person, or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of any such Person, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Preferred Shares or other securities which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are available upon
written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced
by the Rights Certificate or Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the Shares Acquisition Date.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meetings or other actions affecting shareholders except
as
<PAGE>
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS, the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of __________________, _________.
ATTEST: CINCINNATI BELL INC.
_________________________________ By: _________________________________
Secretary
Title: ______________________________
Countersigned:
THE FIFTH THIRD BANK, Rights Agent
By: _____________________________
Authorized Signature
<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________________ hereby sells,
assigns and transfers unto ___________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________, _____________
_______________________________________
Signature
Signature Guaranteed: _______________________________________
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of such Person.
Dated: __________________, _________ ___________________________________
Signature
Signature Guaranteed: _______________________________________
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by Rights Certificate.)
To: CINCINNATI BELL INC.
The undersigned hereby irrevocably elects to exercise ___________________
Rights represented by this Rights Certificate to purchase the Preferred
Shares issuable upon the exercise of the Rights (or such other securities or
property of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security or other identifying number: ___________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number: ___________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated: ______________________, ____________
_______________________________
Signature
Signature Guaranteed: _______________________________
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person, or an Affiliate or
Associate of any such Person.
Dated: ______________________, ____________
_______________________________
Signature
Signature Guaranteed: _______________________________
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
Exhibit C Summary of Rights to Purchase Preferred Shares
C-i
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On March 3, 1997, the Board of Directors of Cincinnati Bell Inc. (the
"Company") declared a dividend distribution of one right ("Right") on each of
the Company's outstanding Common Shares, par value $1.00 per share (the "Common
Shares"), to holders of record of the Common Shares at the close of business on
May 2, 1997 (the "Record Date"). One Right also will be distributed for each
Common Share issued after May 2, 1997, until the Distribution Date (which is
described in the next paragraph). Each Right entitles the registered holder to
purchase from the Company a unit ("Unit") consisting of one one-hundredth of a
Series A Preferred Share of the Company (the "Preferred Shares") at a purchase
price of $125 per Unit, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement dated as
of April 29, 1997 (the "Rights Agreement") between the Company and The Fifth
Third Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Share certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Shares and a
Distribution Date will occur upon the earliest of (i) 10 business days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Shares or (ii) 10
business days following the commencement of a tender offer or exchange offer
that would if consummated result in a person or group beneficially owning 15% or
more of the outstanding Common Shares.
Until the Distribution Date (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after May 2, 1997 will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Shares outstanding will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on May 2, 2007, unless earlier redeemed by the Company
as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except for certain issuances in
connection with outstanding options and convertible securities and as otherwise
determined by the Board of Directors, only Common Shares issued prior to the
Distribution Date will be issued with Rights.
If a person becomes the beneficial owner of 15% or more of the Common
Shares ("Flip-In Event"), each holder of a Right will have the right to receive,
upon exercise, Common Shares having a value equal to two times the exercise
price (Purchase Price) of the Right. Moreover, the Rights will not be
exercisable until the Rights are no longer redeemable as
<PAGE>
described below. If the Company does not have enough authorized Common Shares
to satisfy the exercise of the Rights, the Company will be required to
substitute value in the form of cash, property, debt or equity securities, or a
reduction of the Purchase Price, or any combination of the foregoing, in an
aggregate amount equal to the value of the Common Shares which would otherwise
be issuable. In addition, the Company may provide that, in lieu of payment of
any exercise price by holders of the Rights, the Company will issue to such
holders securities equal to the value of the spread between the exercise price
and the value of the Common Shares. The Acquiring Person would not be permitted
to exercise any Rights and any Rights held by such person (or certain
transferees of such person) will be null and void and non-transferable.
For example, at an exercise price of $125 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following a Flip-In Event
would entitle its holder to purchase $250 worth of Common Shares (or other
consideration, as noted above) for $125. Assuming that the Common Shares had a
per share value of $25 at such time, the holder of each valid Right would be
entitled to purchase ten Common Shares for $125. Alternatively, at the
discretion of the Board of Directors, each Right following a Flip-In Event,
without payment of the exercise price, would entitled its holder to Common
Shares (or other consideration, as noted above) with a value of $125.
If, following the Distribution Date, the Company is acquired in certain
specified mergers or other business combinations (I.E., the Company does not
survive or its Common Shares are changed or exchanged), or 50% or more of its
assets or earning power (on a consolidated basis) is sold or transferred in one
transaction or a series of related transactions ("Flip-Over Events"), each Right
becomes a Right to acquire common stock of the other party to the transaction
(or its ultimate parent in certain circumstances) having a value equal to two
times the Purchase Price. As an enforcement mechanism, the Rights Agreement
prohibits the Company from entering into any such transaction unless the other
party agrees to comply with the provisions of the Rights.
The Purchase Price payable and the number of Units of Preferred Shares or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Shares on the
last trading date prior to the date of exercise.
- 2 -
<PAGE>
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right, at any time prior to a Flip-In Event. Immediately
upon the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for shares (or other consideration) of the Company or for common
stock of the acquiring company as set forth above.
As long as the Rights are redeemable, the Company may amend any provision
of the Rights Agreement in any respect without the approval of the holders of
the Rights. At any time when the Rights are no longer redeemable, the Company
may amend the Rights Agreement without the approval of the holders of the Rights
in order to cure any ambiguity, correct or supplement any provision which may be
defective or inconsistent with any other provision, shorten or lengthen any time
period, or change or supplement the provisions in any manner in which the
Company may deem necessary or desirable; provided that no such supplement or
amendment shall adversely affect the interests of the holders of the Rights, and
no such amendment may cause the Rights again to become redeemable or cause the
Rights Agreement again to become amendable other than in accordance with the
terms of the original Rights Agreement.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
April __, 1997. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
- 3 -
<PAGE>
[SEAL] PRESCRIBED BY CHARTER NO.________
BOB TAFT, SECRETARY OF STATE APPROVED __________
30 EAST BROAD STREET, 14th FLOOR DATE ______________
COLUMBUS, OHIO 43266-0418 FEE
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
CINCINNATI BELL INC.
- -------------------------------------------------------------------------------
(Name of Corporation)
JOHN T. LAMACCHIA , who is:
- ----------------------------------------------------------------------
/ / Chairman of the Board /X/ President / / Vice President (Please check one.)
and WILLIAM H. ZIMMER , who is:
- -----------------------------------------------------------------------
/X/ Secretary / / Assistant Secretary (Please check one.)
of the above named Ohio corporation organized for profit does hereby certify
that: (Please check the appropriate box and complete the appropriate
statements.)
/X/ a meeting of the shareholders was duly called for the purpose of adopting
this amendment and held on April 28, 1997 at which meeting a quorum of the
shareholders was present in person or by proxy, and by the affirmative vote
of the holders of shares entitling them to exercise 80.78% of the voting
power of the corporation.
/ / in a writing signed by all of the shareholders who would be entitled to
notice of a meeting held for that purpose, the following resolution to
amend the articles was adopted:
FOURTH: The number of shares that the corporation is authorized to
have outstanding is 480,000,000 common shares, $1.00 par value
(classified as "Common Shares"),
The remaining provisions of the presently existing Article FOURTH
remain unchanged.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of
the corporation, have hereto subscribed their names this
________________________ day of April, 1997.
By _________________________________ By ___________________________________
(Chairman, President, Vice President) (Secretary, Assistant Secretary)
NOTE: OHIO LAW DOES NOT PERMIT ONE OFFICER TO SIGN IN TWO CAPACITIES. TWO
SEPARATE SIGNATURES ARE REQUIRED, EVEN IF THIS NECESSITATES THE ELECTION OF A
SECOND OFFICER BEFORE THE FILING CAN BE MADE.
